Currently, only the interest component of the corpus is made available to the industry. In the Budget ’05, finance minister P Chidambaram had said that the corpus deserved to be increased, and proposed to do it in phases beginning next year.

The expenditure budget for 2005-06 provided for disbursal of the fund next fiscal, sources said. It is not clear if there would be yearly allocations of Rs 150 crore for pharma R&D each for the five years beginning 05-06, as demanded by the industry.

With the recently introduced MRP-based excise levy increasing the incidence of excise duty on the industry, which is already saddled with over Rs 1000 crore of packaging material, it was expecting a cut in the duty from 16% to 8%. This, however, did not materialise. The Budget increased the tax burden on the industry, with new tax proposals like the fringe benefit tax (FBT).

The levy of FBT is expected to affect the pharma industry more because of the large number of medical representatives employed by pharma companies. Harinder Sikka of Nicholas Piramal India Ltd said that the industry, which was already reeling under the impact of the ‘untimely’ introduction of MRP-based excise duty, was expecting some relief from the Union Budget, but the Budget has belied its expectations.