Pharmaceutical companies can now take advantage of government aid for upgrading their technology to the level prescribed by the World Health Organisation (WHO).
The government has expanded the capital subsidy scheme to include machinery used in manufacturing drugs, offering assistance of up to Rs 400 crore to the industry for improving their technological capabilities.
The ministry of micro, small and medium enterprises (MSMEs) has included 179 pharmaceutical equipment in the second supplement to the Credit Linked Capital Subsidy Scheme, which allows the buyers of the machinery to claim 15% subsidy on loans taken for the purpose.
The purpose is to allow the pharma firms to upgrade their manufacturing methodologies to the level given in the Good Manufacturing Practices (GMP) of the WHO.
?In total, we have added more than 200 plant and machineries across various sectors. However, we have focused more on pharmaceutical sector as it was unable to meet the WHO norms,? MSME additional secretary and development commissioner Madhav Lal told FE. Of over 8,000 MSME drug makers, only 1,000 are GMP compliant at present.
According to official estimates, more than 3,000 small drug makers could benefit from the scheme and the total assistance could be as much as Rs 400 crore, resulting in an additional product turnover of close to Rs 10,000 crore a year.
In 2005, drug makers were subject to Schedule M of Drugs and Cosmetics Rules, 1945 to make them compliant with the GMP, but MSMEs were unable to improve their technical capabilities due to financial constraint. GMP norms were introduced to ensure that the pharmaceutical manufacturers produce goods of standard qualities, therefore making sure of consumer safety.
A pharma company has to obtain GMP approval from the concerned country before exporting a product. The approval is given based on the technology used in the plant where the concerned product is manufactured. However, the MSME industry feels the step taken by the government is too little, too late.
SME Pharma Industries Confederation?s vice-chairman Lalit Kumar Jain said, ?We have been representing with the government on Schedule M for long. We had told them that a company requires between Rs 20 crore and Rs 30 crore to upgrade the plant and machinery to the required level. We had also asked them to change the definition of MSMEs so that we can invest the required sum without losing the character. But the help they have offered is not enough. They should have done more.?
A manufacturing company is covered under the Micro, Small and Medium Enterprises Development Act, 2006 only if the total investment in it does not exceed Rs 10 crore. On exports though, Jain said the measure might help. The MSME sector accounts for 65% of drug exports by the country.
According to Directorate General of Commercial Intelligence and Statistics, under the ministry of commerce and industry, India?s exports of basic chemicals and pharmaceuticals were worth $15 billion in 2008-09.
