Karnataka pharma sees denial of RoDTEP benefits a serious blow to drug exporters

Bengaluru, August 20, 2021:

The pharmaceutical industry in Karnataka is upset that the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme has not included the pharma sector and views it as serious blow to trade in the global markets. Early this year, the Union government came out of the MEIS (Merchandise Exports from India Scheme) because it was not compliant with World Trade Organization norms.

The industry said that this should not have happened going by the importance of the sector which exported life saving medicines not just to the developed world but also to the under-developed markets.

Jatish Sheth, director, Srushti Pharma and member, steering committee, Karnataka Drugs and Pharmaceutical Manufacturers Association (KDPMA) pointed out that the entire pharma industry was adversely affected when the government discontinued the MEIS from January 2021. Here the sector was awaiting for the refund of October-December 2020 which has not yet been released and by not giving RoDTEP both the top line & bottom line of the US$ 25 billion Indian pharma export industry will certainly be severely impacted.

Speaking on a similar note was Manoj Palrecha, managing director, Lake Chemicals and joint secretary, KDPMA, who said that while RoDTEP is not an incentive but a reversal of duty to stay competitive in the business, pharma should not have been ignored. 

When the government withdrew the MEIS, every exporter was under the impression that duty and the taxes paid on inputs which was around 1.25 per cent in MEIS at least would get reimbursed in the new RoDTEP Scheme, said the Lake Chemicals chief.

We seem to have been left in the lurch as exporters like Lake Chemicals among others have already factored cost in this while quoting prices to customers in the global market. We are not clear why the government stalled MEIS and brought in RoDTEP which to our surprise found pharma omitted from the list of beneficiaries, added Palrecha.

In fact, the industry had submitted a comprehensive report proving wherein 5-6% of duty remission was logically and scientifically justified. This sector is becoming extremely competitive globally and China too is becoming abrasively aggressive in ROW (rest of the world) consisting 50% of the global market. In rest of the 50% of the highly regulated markets of US & EU drug prices are already under pressure, said Sheth.

Now the denial of RoDTEP to the pharma industry amounts to whipping the winning horse. By not giving RoDTEP remission of duty will lead to intense pressure on the industry and will affect exports, noted Sheth.

In 2020-21, Indian pharma exports registered 18.7% growth to garner revenues to the tune of $24.44 billion. PharmaBiz