ABLE Seeks Several Fiscal And Tax Incentives From Union Budget.

The Association of Biotechnology Led Entrepreneurs (ABLE) has sought several fiscal and tax incentives from the Union Budget, which is to be presented by finance minister Pranab Mukherjee in mid-March, as the budgetary support from the government is crucial for the growth of the biotech industry in the country.

Some of its demand include the need for innovation fund, Export Tax Incentives, Tax Incentives for Research Activities, Recommendations pertaining to Minimal Alternate Tax (MAT) and Service Tax, Conversion to Limited Liability Partnership (‘LLP’), Section 115A – Royalty and Fees for Technical Service Payments, Mergers and Acquisitions, Section 206AA – Withholding Tax compliance, Extension of 100 per cent Tax free status for Biotech and Parma SEZs, and transfer pricing issue.

Other recommendations include duty exemption norms for raw materials imported for indigenous manufacture of life saving drugs and diagnostics, recognition of anti cancer drugs as life saving drugs, duty exemption on diagnostic kits for infectious diseases, excise duty exemption on molecular diagnostics for critical infections, establish “Biotechnology Finishing Schools” and exchange programmes.

According to ABLE, the industry has a strategic role to play to address the need for affordable healthcare both in terms of reasonable medicines and therapies and their delivery models, to meet the challenges of food and energy security.

The Biospectrum-ABLE industry survey of 2010-2011 reported the sector revenues as Rs.15,000 crore. It is estimated to reach a turnover of around Rs.45,000 crore by 2015 which would require it to grow at about 30 per cent year on year. “To achieve this target, a synergistic support from central and state government is needed both in the short as well as long term,” stated ABLE.

Insisting on the need for an Innovation Fund, ABLE proposed to the Union government to invest in setting up venture funds especially to support all companies that support innovation in India, be the foreign owned or the locally owned.

As per the current tax incentives, 200 per cent weighted deduction is available to firms that are engaged in manufacturing or production. There is a sunset clause prescribed for availability of this incentive for expenditure incurred up to March 31.

Withdrawing the benefit of 200 per cent weighted deduction may prove to be a dampener to most industry players undertaking or proposing to undertaking Research & Development in India. In order to provide an impetus to R& D growth, the benefits of the weighted deduction should be continued beyond March 31.

The rate of weighted deduction should also be increased from the present rate of 200 per cent to 300 per cent, considering the long gestation period to break-eve and R&D incentives globally offered by other countries. The contract research organizations (CROs) are not included in this scheme. For long term growth of India as an R&D hub, the scheme should also be extended to include the CROs.

Weighted deduction should be provided for outsourced clinical trials and R&D, preparations of dossiers, foreign consulting/legal fees for NCE (New Chemicals Entities), ANDA (Abbreviated New Drug Applications) filings with the US FDA and patent defending charges to facilitate the companies to outsource part of research activity to achieve cost efficiencies.

Source : pharmabiz.com