Over 300 life-saving medicines may become cheaper by at least 25 per cent, if the finance ministry considers a proposal by its chemicals and fertilisers counterpart to provide customs and excise duty waivers on all drugs that are part of the National List of Essential Medicines.
The recommendation is for 354 medicines covering 27 broad therapeutic segments and includes commonly used medicines like paracetamol. The customs and excise duty together contributes 26 per cent of the final price of such drugs.
The chemicals and fertilisers ministry proposal has been supported by pharma companies, who have also agreed to pass on the benefits of such waivers by slashing retail prices.
Controlling the prices of NLEM medicines has been a long-time agenda for Chemicals and Fertiliser Minister Ram Vilas Paswan.
The proposed pharma policy, moved by the chemicals ministry, had called for the inclusion of all NLEM medicines under the purview of price control. The policy is currently being vetted by a group of ministers headed by agriculture minister Sharad Pawar.
In addition to tax exemption for NLEM drugs, the ministry has sought an increase in the duty exemption limit enjoyed by the small-scale drug makers.
The ministry wants to see the limit of small-scale industry turnover for central excise duty exemption raised to Rs 3 crore (Rs 30 million) from the current Rs 1.5 crore (Rs 15 million).
It also wants 'contract manufacturing' to be considered as a taxable service and thereby bring the contract drug manufacturers in the tax exempted states like Himachal and Uttarkhand under the service tax net. Reduction of excise duty on medicines from 16 per cent to eight per cent is also being sought.
