The domestic pharmaceutical industry on Friday welcomed Finance Minister P Chidambaram's proposal to cut excise duty on drugs and said the move will help in making medicines more affordable to the common man.

Hailing the budget as extremely positive, Ranbaxy [Get Quote] CEO and Managing Director Malvinder Mohan Singh said apart from excise cuts, the Finance Minister's decision to include outsourced research and development operations under the exemption limits would boost drug discovery operations in the country.

"Outsourced R&D has been given a 125 per cent weighted tax deduction and it is certainly expected to boost the sector in a major way. Overall, it is extremely positive for us keeping in mind that this is the last full fiscal budget of this government," Singh told PTI.

He said the move would boost investments in R&D and would encourage a lot of contract researchers to set shops in India.

The Finance Minister proposed to totally exempt certain specified life saving drugs and bulk drugs used in the manufacturing of such drugs from excise duty, while reducing customs duty on such products to five per cent from the present 10 per cent.

Addressing pharmaceutical industry's long pending demand, Chidambaram has also proposed to reduce excise duty on all goods produced in pharmaceutical sectors to 8 per cent from 16 per cent.

Drug price regulator National Pharmaceutical Pricing Authority (NPPA) Chairman Ashok Kumar said the Finance Minister's move to cut excise duty would ensure better availability of drugs to patients.

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