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PWC’s budget expectations

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Health insurance

  • For health insurance premium deductibility, the current cap of Rs 15, 000 should be raised to Rs 30,000.
  • Hike FDI in health insurance companies to 49 per cent.
  • Promoting biotech
  • Make Bio-manufacturing the next big opportunity after generics for India. Invest $4-5 billion each year (Rs 24,000 to 30,000 crores) in the next five years to grow the biotech industry to $100 billion by 2025 with a 25 per cent return on investment and set a growth rate of 30 per cent year-on-year.
  • Allocate Rs 500 crores each year from the R&D cess accessible by the Technology Development Board be used to stimulate the biotech sector across the range: from Human Resource Development, high-end institutional development in biotech, stimulating incubators, ignition grants, start-ups and small businesses, and collaborative efforts in cutting-edge technologies with business of all sizes on one hand and national and international academia on the other.
  • Corporate Social Responsibility (CSR) funds may be used for stimulating public-good and socially- relevant research in collaboration through partnership with the Biotechnology Industry Research Assistance Council (BIRAC) of the Department of Biotechnology (DBT). All such contributions to BIRAC should be fully-tax exempt. As of now only incubators in academic institutions are eligible for availing CSR funds for promoting innovation. This was passed as a GO last year. This should be extended to all incubators and science / biotech/ knowledge parks, whether they are part of academic institutions or not.
  • Biotechnology companies should be treated as industrial, not as commercial consumers.

Research and development

  •   Service tax for the CRO industry is putting Indian companies at a significant disadvantage over some of our neighbours and competitors. We request elimination or substantial reduction in the service tax, especially for overseas clients paying in foreign currency.
  • Current tax incentives of 200 percent weighted deduction should be increased to 300 percent with a validity of 10 years
  • Weighted tax deductions should be applicable to outsourced clinical trials and R&D, preparations of dossiers, foreign consulting/legal fees for NCE (New Chemicals Entities) and ANDA (Abbreviated New Drug Applications) filings with the US FDA and Patent defending charges.
  • Encourage setting up of venture capital funds focused on investments in biotechnology, all contributions by Indian Corporate including Pharma companies to SEBI registered Biotechnology funds should be eligible for the weighted average tax deduction under Section 35 (2AB).
  • When computing the MAT, weight deduction should be allowed under Sec-35 (2AB).
  • Allow for a tax holiday for a period of 10 year indigenously developed biopharma drugs.
  • Create technology parks similar to IT/ITES parks, with tax and Duty benefits to support industry efforts in attaining self-reliance in this critical component of our scientific and economic growth.
  • Education systems must be developed to support the requirements of the industry for research and development.
  • Not for profit, section 25 incubators and biotech/knowledge/science parks be provided tax exemption

Manufacturing

  • Companies must be encouraged to start their manufacturing operations in India. However, the current Duty and tax structure acts as a deterrent for local manufacturing as Customs Duty on complete system is lower than the components for manufacturing and in addition the buyers have to spend additional Central Excise Duty and sales tax on locally manufactured goods making it prohibitively expensive compared to imports.
  • Tax rebates to encourage green manufacturing services.
  • Provide grants for hiring trainees in skill development programmes and also 50 percent matching grant for overseas training.

100 per cent exemption of Excise/Customs Duty on:

All lifesaving medicines-anti-cancer, anti-AIDS etc.

Contract research organisations (CRO) involved in genomic services.

Consumables and capital goods of biotechnology industry.

Import duty for industrial biotechnology sector.

Raw materials used for manufacturing lifesaving drugs.

Diagnostic kits for infectious diseases

Molecular diagnostics for critical infections.

And exemption of all taxes (VAT, CST) on paediatric vaccines.

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