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Govt needs to widen weighted tax rate from 200 to 250% to drive innovation: Ajay Shah
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Nandita Vijay, Bengaluru
January 25 , 2018
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In order to boost innovation, the Union government need to increase the
weighted tax deduction on R&D from 200% to 250%. The government had
deducted the expenditures on R&D from 200% to 150% and eventually
phasing out. This has not created any positive outcome amongst the
Indian pharmaceutical industries, stated Ajay Shah, vice president,
Recruitment, TeamLease Services.
To boost innovation, the
industry preferred an incremental change in weighted tax deduction on
R&D from 200% to 250% and expand the scope of the benefit to include
R&D expenses incurred outside the facility like CRO, clinical
studies, patent and product registrations. This would encourage more
venture capital and private equity firms to come forward and make
investments creating more opportunities for manpower hiring. For the
Budget 2018, it is important for the government to consider this, he
added.
India is home for increased focus on shared service setups
which created jobs within pharma manufacturing and FMCG in large
numbers. Now the government needs to ensure higher education is more
rooted to bridge the widening skill gap. Although last year, saw a
reduction in attrition, yet retention of talented researchers and sales
professionals is a challenge. Technical skills in cloud & data
science platforms have produced new collar jobs that demand deeper
knowledge with sharper skill sets, Shah told Pharmabiz in an email.
The
pharma industry needs to have better policies to retain and nurture the
existing talent, as well as equip them with necessary skills. There is a
need to maximize hiring with a demand of freshers and experienced
candidates with skilled domain expertise. Therefore the government in
this Budget allocation should support skill-based learning, he noted.
Further
in the Budget 2018, the government must expand the Coverage of Safe
Harbour Rules to pharmaceutical industries to have better transfer
pricing and bring down litigation in respect of international
transactions is another point of discussion that can be an inclusion in
the new budget, said Shah.
India pharma has been witnessing a
high traction. This is driven by increased focus on health-wellness,
government- supported healthcare initiatives and the knowledgeable
consumers. The robust sales and simpler forms of medications accessible
at competitive prices, pharma companies have adopted, digital sales
approach and online platforms. All these will spike hiring &
investments in people management for the pharma sector. The government
cannot ignore the pharma sector and therefore adequate assistance is
expected during Budget 2018.
The current norms on price control
and generic drug prescription is a bang bang on the quality drugs versus
suspect quality drugs. Therefore the government will need to promote
and create larger routes for research, innovation, stated Shah.
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