Pharmaceutical companies usually invest heavily on a manufacturing line for a new drug or vaccine in their export facility as the returns are attractive.
The government would also prefer the arrangement but working around the regulations has proved tricky, the source added.
Pune-based Serum Institute of India (SII) has sought customs duty waiver for the domestic supply of the products from its facility situated in the special economic zone (SEZ) near Pune, sources in the government said.
Goods sold from SEZ into the domestic tariff area (DTA) are treated as imports and attract customs duty.
The government has been considering such a relief since April, especially for the pharmaceutical industry. Of course, the succour is being planned for a limited timeframe and could be restricted to supplies relevant to fighting the Covid-19 pandemic. An announcement has, however, been delayed as the revenue department expressed reservations over the absence of a mechanism to implement it.
A source said that the company’s application is aimed at selling the vaccines domestically without waiting to set-up a separate line in the manufacturing facility meant for the domestic products. The government would also prefer the arrangement but working around the regulations has proved tricky, the source added.
According to another official, in the earlier rounds of deliberation, the proposal to waive off customs duty for medical products manufactured in SEZ posed a problem that such a regime could disadvantage domestic manufacturers of similar commodities. But if the regime is restricted to a vaccine which is yet to be manufactured by domestic suppliers then the proposal could be implemented, he added.
However, officials said that such decision was always fraught with the risk of an enquiry or investigation at a later stage given it involves benefits to a private company. “Bureaucrats are usually wary in taking initiatives on such proposals which may be logically sound in the current context but can always be made to look suspicious later,” a source said.
Pharmaceutical companies usually invest heavily on a manufacturing line for a new drug or vaccine in their export facility as the returns are attractive. This manufacturing line is then replicated later in factories meant for domestic supplies.
If it was a regular drug, allowing SEZ unit to supply into DTA doesn’t hold much merit but this is one of the options to ensure the vaccine is quickly available in the domestic market,” another source said. He added that the other option was to wait until the company was ready to supply in the domestic market from its designated factory.
Last week, SII officials said that the Oxford Covid-19 vaccine, which is undergoing Phase-3 clinical trials in India under its auspices, could be commercially available by March next year. Separately, the company is also developing an intranasal vaccine which is currently under trials.
The firm is the world’s largest vaccine manufacturer by the number of doses produced and sold globally (more than 1.5 billion doses).