A few hours after the
presentation of the national budget by Finance Minister, Mr Pranab
Mukherjee, on February 28, 2011, I happened to meet one of the industry
leaders at a city restaurant. We had the option of chatting over a cup
of coffee in both the air-conditioned and non-air conditioned sections
of the place. Naturally we chose the air-conditioned section, because
we were not sure how long this luxury will last.
After all, the Finance Minister had announced a 10 percent service tax
on medical treatments done at air-conditioned hospitals. If it is
hospitals this year, the same logic for taxation could be extended to
many other categories of establishments. My industry friend was worried
because his company has significant research facilities and it is all
air-conditioned. Most biotech and pharma research today is carried out
at modern facilities where air-conditioning is one of the most basic
needs. And high-end research and modern offices in the country’s fast
growing cities cannot do without air-conditioning.
Would the government slap a tax on my labs next year, he asked me
worriedly. I could not
reassure him because Mr Mukherjee has opened a new route to extract
more from already taxed sections of the society. Hospitals are
important to the biotech industry, except the agribiotech sector.
Because, biotech drugs are still very expensive and are used by
patients who get their treatments at high-end hospitals. There will be
pressures on pricing as hospitals try to cut costs.
We turned our attention to rest of Mr Mukherjee’s budget and what was
in it for the biotech sector. To our surprise, we found that that
the budget has just bypassed the biotech sector. This was not the case
when BioSpectrum was launched eight years ago. As we celebrate eight
years of catalyzing the growth the of the industry, one can only
nostalgically look back at the series of industry-friendly reports we
had covered in these columns. The industry’s request for a five-year
tax holiday on home-made biotech products has been brushed aside. A
longer time frame for tax-free regime for biotech special economic
zones (SEZs) has not been granted. The request to abolish customs duty
on high-tech equipments imported for research purposes by the industry
has not been accepted. The list of unfulfilled demands from the
industry is long.
What conclusions can one draw from this? It could mean that at the
national level, the government does not want to bestow any special
status to biotech sector. Or there is a belief among the policy-makers
that everything needed to stimulate the biotech sector has been done
and there is no need for any special attention now. We don’t know which
one of this is true. The industry certainly will have to wait for
sometime to figure it out.
On the other hand, governments at the state level are rolling out red
carpets. Karnataka government has been at the forefront of this
and even had a successful interaction with the industry in mid-February
to tweak its revised Millennium Biotech Policy. Karnataka’s biotech
secretary, Mr Ashok Kumar Manoli has one big dream now. He is willing
to roll out the red carpet for the biotech investor who commits at
least $20 million (
100 crore) investment in the country.
In this backdrop, we thought it was better to find out from the
industry itself about the prospects. So the Special Story “Will India
biotech hit $10 bn by 2015” is an attempt to read the minds of the
industry leaders. I will leave it to you to read the undercurrents of
the many observations made in this report and give me the feedback.