Planned special tax for the import of pharmaceutical raw materials to India fuels fears of a possible shortage

29. April 2020

A government committee has proposed to introduce a special tax on pharmaceutical raw materials imported into India. Experts, on the other hand, fear that this would cause further shortages due to the already tense situation caused by the after-effects of the coronavirus outbreak in China. “The special tax will not exceed 1 percent,” said a government spokesman. The corresponding committee of the Department of Pharmaceuticals (DoP) also wants to establish a new authority to monitor the production and reserves of drugs in India. The new special tax could be used to finance this authority, according to a proposal.

The committee was set up about a month ago when traders raised the prices of certain raw materials. The reason given was the extended and prolonged closure of producers in China. The committee also proposed that 12 raw materials and medicines could no longer be exported from India so easily in the future. This should ensure that there is no shortage in the country should the closure of Chinese factories continue. Most of the 12 substances are imported from Hubei province, whose capital Wuhan was the epicentre of the Covid-19 outbreak.

Indian pharmaceutical manufacturers import around 70 percent of their basic substances from China. According to data from the Indian government, the value of the imported goods is 2.4 billion US dollars. It is still to be investigated to what extent India is dependent on the raw materials imported from China and what measures can be taken against this. Meanwhile, the Indian government is considering promoting the domestic production of pharmaceutical raw materials to prevent a scarcity. Therefore, there could also be opportunities for foreign producers to establish new production sites in India. The Central Drug Standard Control Organisation (CDSCO) is responsible for the registration and approval of all drugs and medical devices on the Indian market. We would be pleased to advise you on the appropriate India certification of your products.