Pharmaceutical exporters have appealed to the Reserve Bank of India (RBI) to consider extending the payments of due/overdue letters of credit (LCs) by another six months.
Pharmaceutical exporters have appealed to the Reserve Bank of India (RBI) to consider extending the payments of due/overdue letters of credit (LCs) by another six months to ensure that life-saving pharmaceutical products do not run out.
“We are flooded with calls asking for financial relief, particularly in terms of non-fund limits as the 10% of turnover as additional Covid working capital limits sanctioned as part of the stimulus package is grossly insufficient,” Dr Dinesh Dua, chairman of Pharmaceuticals Export Promotion Council of India (Pharmexcil) and executive committee member of Indian Drug Manufacturers’ Association (IDMA) said.
In a letter to RBI, the council has said: “Pharmexcil member companies which generate value turnover of $50 billion divided equally for domestic and exports, exporting to 206 countries, have approached you to immediately consider at least an extension of six months for due payments against non-fund limits predominantly provided through LCs for making payments to the bankers.”
There was serious disruption in the industry in March both in terms of manufacturing as well as supply chain, resulting in inability of practically all pharma companies to continue producing highly cost-effective and quality products.
“Due to transportation and manpower constraints, raw materials as well as finished goods worth more than $1 billion are stuck at ports, and to complicate matters, airline operations are also suspended. As a result, the pharma industry, despite being classified as essential services, is unable to operate beyond 25-30% of their normal operational manufacturing capacity,” Dua said. This may lead to acute shortage of life-saving pharmaceuticals both in India and overseas, he added.