Pharma units in Gujarat look with high hopes on GST roll out

By | September 16, 2016

The pharmaceutical industry in Gujarat looks at the roll out of Goods and Services Tax (GST) with high hopes. With the uniform tax structure in the country under GST regime, the industry in the State, looks to regain its lost share in the country’s overall pharmaceutical business in the coming two years.

According to industry players, about a quarter of the total 200-odd units, which had shifted to states such as Sikkim and Himachal Pradesh due to tax advantage, may return to Gujarat after GST becomes the reality.

The state’s share in the overall pharmaceuticals turnover in the country had come down from about 42 per cent in 2007 to about 30 per cent now.

“Tax sops had attracted Gujarat’s pharma industry to move to the Northern states. We say over 200 such units moving out of Gujarat about 10 years ago. After the roll out of GST, the pharmaceuticals units in Gujarat will have a level-playing field to compete with those states offering tax incentives. We expect more than 50 units to return to Gujarat, this will improve our share in the India’s pharma sector,” said Nirav Mehta, vice-chairman, Gujarat State Board of Indian Drug Manufacturers’ Association (IDMA).

“There are limitations for expansion in Himachal Pradesh because of the hilly area, which goes against the further investments by the units in that state,” added Mehta, who operates a unit there and now plans to expand in Gujarat.

According to Gujarat government’s data, with $ 6.7 billion (approx 44,900 crore) turnover for 2015, the state holds 33 per cent share in India’s overall pharma sector turnover. The sector currently employs about 85,000 people in the state.

Also, the state is emerging as the medical devices hub with over 53 per cent of the total medical devices manufacturers in the country having operations in Gujarat.

The pharma sector in the state however, continues to face uncertainty about the tax rates under the new GST regime. As against the current average tax rate of about 11 per cent, the industry expects the overall GST to be around 12 per cent as proposed in the draft. However, for the clarity on the GST and the possible continuation of tax sops in other states, the IDMA is conducting a special seminar on GST’s impact on pharma industry during its upcoming Pharmac India exhibition to be held in Ahmedabad in during 13-15 October.  Source- http://www.thehindubusinessline.com [15-09-2016]

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