GST may help pharma industry regain lost share.

AHMEDABAD: The roll out of Goods and Services Tax (GST) will help Gujarat regain its lost share in pharma production. With tax structure getting uniform across India many companies which had shifted to states such as Himachal Pradesh, Sikkim and Assam to avail tax incentives are likely to shift back to Gujarat for future expansion.

"The share of Gujarat in India's pharmaceutical production was 42% a decade ago. Tax havens attracted many units from Gujarat bringing down state's share to 22% at a time when the exodus was at its peak. At present, the state has managed to garner 30% share and it will again rise to above 42% in next 2-3 years. GST will provide a level-playing field to units in Gujarat against those based in tax exempted states," said Nirav Mehta, vice-chairman, Gujarat State Board, Indian Drug Manufacturers' Association (IDMA).

Mehta, who already operates one unit in Himachal Pradesh, is now expanding in Gujarat. He was just waiting for GST to become reality. As many as 200 companies from the state had established their units in Himachal, Sikkim and Assam to avail tax benefits. "Around 50-55 odd companies are now mulling to come back to Gujarat. As Gujarat has good infrastructure and skilled manpower. GST will further minimize disparity in tax structure," added Chirag Doshi, former IDMA chairman of Gujarat chapter.

However, industry players are still uncertain about the continuance of tax incentives in North East states post GST implementation. In fact, IDMA has planned a separate seminar on GST's impact on pharma industry during its upcoming Pharmac India exhibition. The event will be held in Ahmedabad in October.

The overall Indian pharmaceuticals market including exports is pegged at about Rs 2 lakh crore. Gujarat accounts for almost Rs 60,000 crore with exports accounting for Rs 28,000 crore. Gujarat, which exports to more than 150 countries, has 750 pharmaceutical companies, both small and big ones. Meanwhile, IDMA officials also believe that GST is not likely to have much impact on prices of various drugs as GST will be levied at transaction levels as against current practice of charging excise on maximum retail prices.

Source : timesofindia.indiatimes.com