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Centre may hike import duty on bulk drugs

NEW DELHI: The government is considering increasing the import duty on active pharmaceutical ingredients (APIs) to 20-25% from the current 10%, to help boost local manufacturing of the bulk drugs, people in the know told ET. The department of pharmaceuticals (DoP) is mulling the proposal as it pushes to make India self-reliant on APIs. A committee of experts formed by the DoP had suggested increasing the customs duty on APIs. "This will help the Indian pharma industry as they face stiff competition from cheap imports," said an official, speaking on the condition of anonymity. The Indian pharmaceutical industry is the third largest in the world, but it is dependent on China for crucial raw material. India imports 70% of the APIs used by its drug makers from China. For some APIs, especially antibiotics, the dependence is more than 90%. Pharma experts, however, said increasing the duty was impractical at present. "We are yet not self-reliant and increasing the import duty is going to hit the pharma industry, especially those which are manufacturing formulations and depending on other countries for APIs," said an expert, requesting anonymity.The government has been working to bring down the dependency for API imports. Last week, a Rs 10,000-crore scheme aimed at reducing the dependency and ensuring adequate domestic supply was launched by the minister for chemicals and fertilizers.The government would provide an incentive of Rs 10 crore each to Indian companies setting up plants to produce 53 crucial APIs for which the domestic drug industry is vulnerably dependent on China. It has proposed to disburse funds within 60 days of the receipt of a claim. Firms whose cost of production is comparable to or less than the import price will get priority. Those availing of the production-linked incentive scheme, which the Cabinet had approved in March, must supply to domestic drug makers. The scheme also offers annual incentives of Rs 720 crore for crucial fermentation products including penicillin g (used to manufacture antibiotics), amino cephalosporanic acid 7-aca (used in manufacturing antimicrobial drugs), clavulanic acid (to treat bacterial infections) and erythromycin thiocynate (anti-infectives), said the official.