By Hitesh Sharma
Indian Union Budget 2021-22: The Covid-19 pandemic has brought the require for continual innovation, seamless provide chain and robust manufacturing capabilities to the forefront for the pharmaceuticals and the life science sectors. Governments across the globe are realising the require of getting self-reliant in the sector, and India is no diverse.
The launch of the Medical Devices Park and the Production Linked Incentive (PLI) scheme for the promotion of domestic manufacturing of vital important beginning components (KSMs)/drug intermediates (DIs) and active pharmaceutical components (APIs) had been in line with the very same realisation.
In the upcoming Union Budget, these require to be additional augmented:
Incentivise study and improvement
It is extended overdue, and India should really participate in the innovation region at a worldwide level. Along with a scheme comparable to the PLI, the government should really contemplate tax incentives to attract innovation, and 200% tax deduction can be brought back by the government.
Attract worldwide investment
Taking a cue from the electronics sector exactly where the government has not only attracted worldwide players, but also supplied an ecosystem to augur development, the pharmaceuticals sector requires to be supported with a comparable ecosystem. Interaction with business and worldwide players would do properly to make India move from a generic manufacturer to an innovator developer and manufacturer for the globe.
Enabling digital transformation
Technology/digital transformation is one more important region of concentrate. In truth, it would be the creating block for the considerably-anticipated universal healthcare in the nation.
Stable pricing policies and tax certainty
The government may possibly also appear at solving concerns such as introducing steady pricing and policy atmosphere favourable for extended-term investment choices, coupled with reduced margins due to government pricing policies, decreasing dependency on imports, improved public and R&D spending, and so forth. Another region that would enable the sector is getting some tax certainty. The government could contemplate regularising PE threat on account of mobility restriction beneath numerous scenarios. From an indirect tax viewpoint, the government could make healthcare inexpensive by ‘zero-rating’ healthcare services to additional incentivise healthcare services, as also reduced the GST prices.
Tax deduction on CSR costs
To market donations, corporate social duty costs could be regarded as a deduction from taxable earnings.
The sector has played a pivotal function in the unprecedented Covid-19 pandemic crisis. Pharmaceuticals and life science could be the centre of concentrate in Budget 2021, as an immunity booster or an antibody for the economy, and to gear-up and be self-reliant for such unprecedented instances in the future—truly creating India atmanirbhar in the well being domain.
The author is companion & national tax leader, Life Science Sector, EY India