Excise waiver recommended for generic drugs in India

11 November, 2005

A government panel in India is drafting the new pricing policy for drugs which is set to recommend fiscal incentives including excise waivers to generic or unbranded drugs in India. The new policy is also likely to remove these drugs from the ambit of price control. It can prove to be a big high for the generic drug manufacturers like Ranbaxy and Dr. Reddy.

At present, all drugs attract a 16% excise duty in India. The levy is on 60% of the maximum retail price. The Prime Minister’s task force too had recommended for reducing the excise duty on all drugs to 8%.

Generic drugs are usually sold by the name of the active pharmaceutical ingredient present in the drug. It constitutes of about 10% of the Rs 23,000 crore retail pharmaceutical markets at present. Besides, a major chunk of the institutional market for drugs, estimated at Rs 4,000 crore, also belongs to these unbranded drugs.

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