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Rajasthan drug makers urge state govt to come up with pharma policy to attract investors & facilitate setting up of API park
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Laxmi Yadav, Mumbai
September 21 , 2020
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The Rajasthan Pharmaceutical Manufacturers Association (RPMA) has urged the state government to come up with a pharmaceutical policy to attract pharma investors to Rajasthan and take steps to get one bulk drug park out of three parks announced by the Central government with a grant-in-aid of Rs. 1,000 crore each.
The bulk drug park will facilitate manufacture of active pharmaceutical ingredients (APIs) which will reduce dependence on Chinese API imports.
The Union ministry of chemicals and fertilizers launched Bulk Drug Park (BDP) Scheme envisaging creation of three bulk drug parks in the country. This is in line with the vision and clarion call for making India Atma Nirbhar in manufacturing 53 critical APIs.
The RPMA in a representation to Rohit Kumar Singh, additional chief secretary, state medical, health and family welfare department, stated that there is a need to make a concerted effort to get one of the three API parks announced by the central government. Besides this, the state can have its own policy to spur bulk drug production as it has potential for future growth. The state has a good network of roads and available land. It is well connected with seaport to Delhi, Haryana, Himachal Pradesh, Uttarakhand which are known as a pharma hub for formulations. If the Rajasthan government comes out with policy to support the API industry, interested pharmaceutical players would set up their footprint in the state, added the industry body.
The production linked incentive (PLI) scheme announced by the Centre for promotion of domestic manufacture of 53 critical APIs attracts big investment ranging from Rs. 20 crore to Rs. 400 crore. The duration of the PLI scheme is six years and the incentive ranges from 10% to 20%. The state government can introduce a scheme for five years to target all MSMEs without any restriction of minimum investment clause. The incentive to be offered under the scheme would be 10%, it stated.
Rajasthan State Industrial Development & Investment Corporation Ltd (RIICO) with offices across the state has many patches of land. It can identify vacant lands for this purpose in their industrial areas or develop new industrial areas, permitted to establish red zone category API/intermediate industries, it added.
Said RPMA president Vinod Kalani, “Considering current tense relationship with China, state policy is warranted to boost the API industry. The state government should focus on getting one bulk drug park out of the three parks. A large chunk of land is available with Rajasthan State Industrial Development & Investment Corporation Ltd (RIICO) which can be earmarked for bulk drug park. It will attract investment in the field of APIs/intermediates/key starting materials (KSMs) etc and make the country self-reliant in API production including manufacturing of 53 identified APIs. Besides 53 key APIs, there are many more APIs which are being imported from China and other countries.”
There are around 100 drug companies in the state including APIs and formulations. Requisite amendments in the pollution control norms and fast track clearances by state pollution control board will entice drug firms to start operation in the state, said Kalani.
Talking about RPMA’s suggestions for incentives to be given to new industries and existing units to expand themselves, he said, “The drug companies may be allowed to set up units on agricultural land with power given to the collector for conversion to industrial land without any condition. This will reduce the land cost, and facilitate the promoters to set up the units at places of their choice without any hindrance. The cost of solar power generation is about Rs. 1.50 per unit. The state electricity board can buy the power from solar plants in the private sector at Rs. 2.50 per unit. The cost of transmission and transmission loss is Rs. 1.50 a unit. So the electricity board can provide power to the units at Rs. 4 a unit.”
The interest subsidy of 5% on term loan and working capital may be given by the state government for the project implementation and for 5 years from the date of start of commercial production. The amount of installment of term loan paid by the unit should be allowed as exemption from payment of income tax. The units should be allowed to retain the share of state GST (50% IGST) on sales for 7 years from the date of sanction of term loan subject to maximum amount to the extent of cost of fixed assets—land, buildings, machinery including laboratory equipment and pollution control equipment. 10% of the project cost may be given by the state government as soft loan at 5% interest with authority given to the bank to disburse the amount after the remaining promoter’s contribution is brought in and invested. Interest will be payable by the unit quarterly from the date of disbursement and the loan amount is to be repaid quarterly in the sixth and seventh year after the start of commercial production, he added.
The amount of ESI and PF contribution (for both workforce and the unit) is paid by the government for a workforce having salary up to Rs. 15,000 a month. This will encourage the unit to employ the local workforce on a regular basis. Rooftop or any type of solar plant installed by the unit should be treated as part of the plant and machinery. This will further reduce the cost of electricity for the unit, he stated.
Pointing out draft notification issued by the environment, forest and climate change ministry proposing a zero discharge, RPMA appealed to the ministry to allow neutral pH water to be used in plants.
Since Rajasthan does not have any river where units can pollute hence the pollution norms for the state should be modified accordingly and solar evaporation system etc should be considered, the industry body added.
The above suggestions if implemented will help industries in cost reduction and compete, reduce hurdles in implementation of the project and ensure faster growth, concluded Kalani.
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