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FICCI proposes that the new Biotech inventions or
products manufactured for the first time in India should be given tax
exemption for at least two years after the commercial launch of the product.
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In terms of Section 80-IB (8A), any company carrying on
scientific research and development is allowed a deduction of 100 percent of
the profits and gains of such business for a period of 10 consecutive
assessment years, if such company is for the time being approved by the
prescribed authority after March 31, 2000 but before April 1, 2005. With a
view to promote scientific research and development in the country, it is
proposed to allow the deductions to companies carrying on scientific
research and development approved by the prescribed authority till April,
2010 as against March 31, 2007 at present.
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Expenditure incurred on patents filed in India and abroad
by companies should be treated as R&D expenses.
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Customs duty exemption on capital goods and raw materials
be extended to all biotechnology companies engaged in R&D irrespective
of the fact whether it is funded by the government or not.
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Reduction in customs duty should be extended to all the
equipment used by the biotechnology sector.
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Most of the biotech products and formulations are new to
our country. So they are not appearing under a specific heading in central
excise tariff, but central excise duty is charged at 16.32 percent basing on
broad nature of the product being manufactured. Whereas most of the time the
same product is being imported in to the country under NIL duty under
Customs tariff. This NIL duty may have been incorporated in Customs tariff
on account of criticality of the product for human health care and non
availability of the same in India earlier. But most of these products are
now manufactured in India and the continuity of such NIL duty concession is
causing lot of hardship to Indian biotech manufacturers since the imported
product has a price advantage due to NIL rate of customs duty.
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The government mayconsider and equalize the duty
structure for imported and locally manufactured biotech product.
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The Central excise tariff currently provided for
exemption of central excise duty on products, which are patented in more
than two countries (one in India and other in the US or Europe). But the
normally patent granting is a highly time consuming and costly process, and
it normally takes 4-5 years to get a patent in the specified countries. So
we propose that the rule should be amended to as application of the Patent
rather than the actual grant of Patent with a condition that if the Patent
is not granted the central excise duty need to paid with retrospective
affect.
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FICCI strongly suggests that biotech industry need to be
provided with support of tax holiday for at least for first two to three
years after the product commercialization to sustain heavy capital and
R&D expenditure made during product development.
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Some State Governments in India have already waived the
sales tax on vaccines and bio-pharma products. Similarly, central sales tax
too could be waived off.
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Another area where government should look into for giving
maximum concessions is that of food technology segment. India has enough
agriculture outputs but there are not adequate facility to store/process
agricultural products or its derivatives. So the waiver of import duties on
food storage and processing equipment will improve the economic condition of
the former.
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The R&D segment should be given all the possible
incentives like allowing all the inputs and equipment, if not produced in
India, free of any taxes and duties. This should include the import of
animals for trial purposes.
- To consider and extend any of these suggestion the government may have to
authorize a single administrative authority to grant, as well as monitor the
use of incentives and to avoid misuse of the benefits given.
