The tax band worked out for the ayurveda medicines has been prepared with a pre-taste of the allopathic pharmaceutical, B Ramanathan, secretary, Ayurveda Medicine Manufacturers' Association of India (AMMAI) told The Financial Express. Considering the distinctions in the dosages administered and the system of administration, any comparison in tax-valuation between the two systems could be unfair, he added. The Thrissur-based association, with over 900 members, had held a meeting last week to voice its concerns on the impact of the new tax system on the industry.

According to J Mahendran Nair, chairman of Pankajakasturi Herbals India Ltd, the withdrawal of the 20 per cent tax exemption on export earnings is likely to cost a revenue loss of Rs 1.5 crore per year, even to relatively small players. In Kerala alone, with 823 ayurvedic medicine manufacturers, there are at least 26 small companies, which have established a firm captive overseas market of their own. Through the new tax proposals, the industry is likely to suffer a revenue loss of Rs 100 crore.

Meanwhile, the excise tax noose , which so far included only Draksharistam and Pippalasavam, has been extended to 4 per cent ad valorum on all generic medicines. According to Medical and Tablet Preparation Act, Schedule VI, medicine preparations have been categorised into two. Medicines that produce self-generating alcohol not capable of being consumed as alcohol is category one. Category two is the medicines that produce self-generating alcohol and is capable of being consumed as alcohol. So far, only the second category had been taxed.

Again, the patented medicines, which had earlier been in the 8 per cent tax bracket, has been moved to the 16 per cent tax category. This is also likely to trigger a sharp rise in the price of ayurveda medicines. The only silver lining for the ayurveda medicine-maker is the Union Government's focus on quality control in the production and marketing of ayurveda pharmaceuticals. The association has welcomed the finance minister's proposal to double the funds allotted for introducing good manufacturing practices (GMP) in all Indian Systems of Medicine (ISM). The standardisation of ayurvedic medicine plant and Research & Development for monitoring the quality will spontaneously result in a buoyant market for the ayurveda industry, Ramanathan said.