Gujarat, the number one state in Pharmaceutical manufacturing, with almost 32 to 33% share in Rs 2 lakh crore Pharma sector in India ( both domestic and exports) would immensely benefit from the Goods and Services Tax (GST) regime which was likely to catapult its share to around 40% by 2020 and generate 22 to 25 thousand more jobs in the sector, Chairman, Indian Drug Manufacturers Association-Gujarat State Board, Viranchi Shah today said.
Addressing a press conference here regarding the 8th edition of Pharmac India,to be held between November 7-9 at the Gujarat University Exhibition Centre in Ahmedabad, he said that the GST has in a large way reversed the adverse effect on Gujarat of the union government’s policy of 2003-04 regarding extra excise and income tax incentives for setting up of pharma units in some Northern and North Eastern states. The earlier regulated regime also calculated tax in a different manner. Those states were given IT waiver for five years and excise rebate for 10 years under the policy. Owing to this Gujarat which had a share of around 42% in the Pharma sector at that time though somehow remained number one yet saw a big drop in share which came down to 32-33% in last 10 to 15 years.
He said that now with GST coming in to picture from July 1, again a level playing field has been created and those who had shifted to other places in the past and many new entrants were flocking back to Gujarat as there was better environment and infrastructure in the state where the Pharma manufacturing sector was almost 110 years old.
‘The GST regime has now put Gujarat at par with even the so called tax free zones with regard to Pharma sector. In Gujarat owing to GST related benefits, the Pharma manufacturing sector would reach 40% in terms of share by 2020. Currently the domestic sector was of one lakh crore while the export was also pegged at an equal figure. Gujarat had a cumulative share of over 60000 crores. In the Indian export Gujarat has a share of around 28% (28000 crore) currently,’ he said.
Gujarat has around 1000 small, medium and large Pharma formulation units.
Shah also claimed that the Pharma sector had seen a drop of around 10 to 15% in its production during the GST transition phase owing to ‘natural initial apprehensions regarding stock and other issues in the wake of a new regime’ but was now back on track with production reaching almost normal figures. ‘It was hit during May, June and July but after that it is again returned to almost normal figures. It is natural to have apprehensions whenever a new tax regime comes. But now it is all over. The GST is playing an equalizer for Gujarat and has balanced the earlier skewed structure,’ he said.
To a query he said that around 85 to 90 thousand employment was currently in Pharma sector in Gujarat alone and owing to expected rise in manufacturing owing to GST, 20 to 25 thousand more job opportunities (22 to 25% in percentage terms) were likely to be created in next three years.
He also said that the state was upbeat about 3 dedicated clusters being set up in Gujarat for the sector. This is in line with 47 Special Economic Zones being set up with government-supported tax benefits. Between 2004 and 2012, Gujarat’s economy has grown at 10% a year, beating the national average of 8.25%. The state’s pharmaceutical
Taking about Pharmac India, Chirag Doshi, Chairman of the PHARMAC exhibition committee said that large international industry delegations from countries like South East Asian Countries, African countries, Middle East countries will be present. Overall, nearly 200 exhibitors are likely to showcase their strengths with footfalls expected to cross 6000 across a vast exhibition area of 4000 sqm. the event will also assimilate key aspects of pharmaceutical printing, packaging, lab material&machinery, pharmaceutical ancillary and utility services & maintenance in the medical and pharmaceutical industry.
With many national and international companies setting up their facilities in the state in due course, GST seems to be a significant factor of growth in this sector in Gujarat.
Also, the government of India had announced 3 different parks in Gujarat for Pharmaceutical Formulation, API – bulk drugs and Medical Device respectively, he added.