The government has fixed a base price of $36 per kg for import of the intermediate `2-cynopyrazine', which is much higher than the $22-24 per kg price at which imports were being made.

It has also slapped a demand on the importing companies for recovery of the custom duty difference of around $18 per kg between the base price and the imported price.

Import at reduced price has been affecting the small sector manufacturers of `pyrazinamide', who use potassium permanganate to manufacture the product.

After investigations, it has been established that at least eight consignments of `2-cynopyrazine' drug intermediate has been cleared at various ports in the price range of $20-24 per kg.

The entire demand for this drug intermediate is being met through imports from Japan and Korea. The drug intermediate `2-Cyamopyrazine' used for the manufacture of `pyrazinamide' has a domestic market of around 400 tonnes valued at around Rs 90 crore.

Japanese companies including KOEI Chemicals have been offering the product to Indian companies at a price of $20-24 per kg against the international average price of $36-40 per kg. Out of the total market of Rs 90 crore, KOEI Chemicals' share of exports to India has been close to Rs 60 crore.

It was alleged that the customs authorities have cleared 2-cynopyrazine drug intermediate at much lower price than the prevailing international prices.

There are three ways of manufacturing the anti-TB drug `pyrazinamide' in India. The first method involves the use of basic cyanopyrazine which is imported from Japan and Korea and attracts 38.4 per cent duty plus four per cent additional duty. The cost of manufacturing the drug through this works to around Rs 2,300 a kg. Import of drug intermediate at reduced prices has resulted in the cost of final product coming down to around Rs 1,400-1500 per kg.

The second way involves the use of diamino maleo nitrite and the third method involves the use of potassium permanganate.