With a view to provide better growth opportunity for the pharma sector in Goa, the industry wants the chairman and members of finance commission to work out a mechanism that will focus on giving due weight-age to the export while dolling out tax incentives. Industry feels that by doing this, the states share from the central excise and customs can also be proportionately increased.
Moreover, industry insiders hope that this will prompt the state government to abolish the levy of entry tax on raw materials used in the state, which can play a major role in attracting new investments into Goa, leading to further expansion and establishment of new pharma units within the state. Experts from the industry strongly feel that this will be a win-win situation for both the industry as well as the government, as the industry will be able to utilize this opportunity to expand its business in the state. While at the same time the government, which is currently grappling with the huge losses both in terms of revenue and employment caused by drastic reduction in mining, will be able to get compensation for the land and other infrastructure by providing it for the growth of pharma sector.
Arun Naik, immediate past president, Goa Pharmaceutical Manufacturers Association (GPMA) said, “Though the contribution of this entry tax on materials is significant to the small state of Goa, it puts unnecessary burden on the local pharma industry. It also acts as an irritant for the CEO of pharma companies when they have to decide on where to locate their next production unit. Moreover, we believe that, the contribution of Goan pharma industry in exports by reducing the current account deficit cannot be overstated particularly in these testing times. The imports of raw materials by the pharma industry is minimum and there is a genuine contribution towards reducing the CAD. Therefore to promote pharma industry in Goa as well as to compensate the local government for the land and other infrastructure, we hope that our export potential is taken into consideration while distributing tax.”
Naik who had recently sent a representation to the finance commission demanding the same, informed that the total output from pharma industry in Goa is around Rs. 5,500 crore out of which exports alone contribute Rs. 4,500 crore, and since there is no excise duty on exports the contribution of Goan pharma industry to the central revenue is comparatively less.
Further he pointed out that the entire domestic production is shipped to centrally located depots of pharma companies located outside Goa, which does not involve CST or local sales tax or VAT, due to which the state government does not get any significant revenue from the otherwise well to do pharma industry. “It was to counter this anomaly and to get something out of prospering pharma industry, that the local government decided to impose entry tax on raw materials and packing materials brought from outside Goa. We hope that the finance commission will take into account all this factors and our recommendation duely while taking their decision, as it will not only help in revenue generation but also the growth of the industry in the state.”
By Suja Nair Shirodkar