Budget 2001: Full Coverage

The minister's announcement of taking appropriate measures to lessen therigours of price control mechanism is expected to provide a major relief tothe pharma industry, Ranbaxy managing director DS Brar said.

Nicholas Piramal India chairman Ajay Piramal, welcoming the budget proposalson pharma said that research in biotechnology will get a fillip while thedigital library of traditional Indian medicinal knowledge will ensure thatIndia's medicinal heritage is now protected.

On reducing the span of price control, the industry, however, continues tobe apprehensive about the implementation aspect. The same has been promisedat various levels without any significant measures during the past twoyears, industry sources said.

In a bid to boost research activities in India, the industry has beenallowed a 150 per cent weighted tax deduction on expenditure incurred onclinical trials, patent filing and biotech research. However, there areindications that more measures on the R&D front could be expected during thecourse of the year.

The biggest disappointment came as the minister failed to look into theindustry's demand of exemption on royalties and licensing of intellectualproperties for the next ten years if invested in R&D activities. Removal ofhindrances to toxic research to capitalise on the huge potential whichexists in India.

Mr Sinha also proposed a detailed legislation on transfer pricing in hisspeech on the basis of the expert committee constituted in November 1999.The committee was to look into the MNCs ability to allocate profit indifferent jurisdiction by controlling prices in intra-group transactions. Onthe legislation of transfer pricing, Arthur Andersen, partner, Mukesh Butanisaid that a separate set of legislation targeting transaction betweennon-resident Indians and resident Indians as also between related partiesand associated parties have been set up.

Mr Butani further said that though clarity is sought on the penaltiesproposed, they are in the range of 100 per cent to 300 per cent of the taxon adjustment. In case of documents being not provided by the companies, hesaid that the penalty would be two per cent on every transaction.

Indian Pharmaceutical Alliance secretary DG Shah said that the budget issatisfactory and the move to widen the scope of weighted deduction is awelcome move.

Morepen chairman and managing director Sushil Suri said that the move toallow weighted deduction on clinical trials is a welcome step and will bebeneficial for Indian companies looking towards the global markets. It willfurther lead to a surge in R&D spending by domestic companies. The assuranceto reduce the span of price control is a welcome step and will give pharmacompanies a major boost, Mr Suri said.