Union Budget 2016-17: Glenn Saldanha, Chairman and MD– Glenmark Pharmaceuticals

The budget did not announce anything specific for the pharma sector

The finance minister has presented a growth-oriented budget amid concerns over stagnating growth and global economic crisis. He needs to be applauded for his long-term focus and commitment for achieving inclusive growth. Infrastructure and agriculture has undoubtedly been given special thrust, which will help in employment generation and boost the economy in the long run. In addition, the finance minister has provided strong impetus to inclusive growth by significantly investing in the long-term drivers of the economy such as education, skill development and growth of the rural economy. He has indeed done a good balancing act in meeting the aspirations of the weaker sections of the society and building a strong infrastructure platform to catapult the economy on a sustainable high growth path in the next couple of years.

Some of the other positives in the budget presented were — no increase in the services tax, which was speculated to rise by two per cent, and no change in capital gains tax. The ‘Make in India’ movement has also been given a fillip through incentives for new manufacturing companies and relatively small enterprise companies.

A move that has come as a slight disappointment for research-driven companies like ours is the reduction of benefit of deduction for research to 150 per cent from April 2017 and 100 per cent from April 2020. This reduction has come without the corresponding tax rate being reduced. The government’s support for innovation R&D is required in the form of tax incentives, regulations and grants for various research projects in sectors like pharmaceuticals. On the other hand; the ‘Special Patent Regime’ proposed to power innovation and research has come as a welcome announcement; but one has to go through the fine print for a complete clarity on this.

Like in the preceding years, the budget did not announce anything specific for the pharma sector; although there were a couple of positives for the healthcare sector. Measures like providing of health insurance of up to Rs 1 lakh per family and the opening of 35,000 medical stores under Pradhan Mantri Jan AushadhiYojana are welcome moves for making medical treatment accessible and affordable for the poorer sections of the society. The budget proposal has also mentioned a national dialysis service programme along with excise duty waiver for dialysis equipment. But the healthcare sector was hoping for schemes like increased national spend for overall healthcare, larger insurance coverage, infrastructure related to healthcare development and increased access to primary and secondary healthcare; which were missing in the budget provisions.

In conclusion it may be said, the finance minister deserves full marks for presenting a well-balanced, growth-oriented budget. So, we can conclude that the budget is definitely positive on intent but now execution is key.

Glenn Saldanha