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BW Businessworld

'Don't Create Legal, Political Hurdles'

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The $4.3-billion Indian biotech industry complains that the lack of governmental support on issues such as timely approvals of genetically modified crops and bio-pharmaceutical products has resulted in the suboptimal growth of the industry in the country. Dr P M Murali, president of the the Association of Biotechnology Led Enterprises (ABLE) says an enabling environment and friendly taxation policies will help.

What are the main hurdles in the biotechnology sector in India at present?
We believe the disparity in the potential of this industry and the realisation of that potential is holding the sector back. For rapid growth biotechnology in India requires an investment of $4-5 billion every year for the next 3 to 5 years. This investment will have to be largely from the private sector and we believe international firms are keen to make part of this investment but the legal and political environment is stopping them from doing so. Thus, we are stuck in a bit of a “chicken and egg” situation. For example, take GM crops. The current start-stop decision making process has severely impacted the investment and increased risks. Between January and May 2014 the shares of bio-tech firms dealing in GM technology have gone up three times but no action has taken place on the ground, this is not a good sign for future investors because there is no certainty about returns in this scenario.

The government needs to work on an enabling environment because with the growing strain on our limited resources we have to find answers in technology to ensure long term growth and development of the country as a whole. The myopic taxation policies or irrational taxes are really breaking the industry. We have heavyweight taxation in place and not growth oriented taxation, which needs to be addressed at the earliest.

Do you think the upcoming budget can ease the situation? How?
We have made recommendations to the finance ministry on three prior occasions as we have done now.  On previous submissions we have not received any response or acknowledgement what so ever, but without politicising the issue we think the current government is looking to make changes and is moving in the right direction.

The industry players do not want protectionism but incentive, which is completely missing in the current taxation and regulatory policies. The fact that a bio-tech torch bearer like Kiran Majumdar Shaw, Chairman Biocon, had to set up her factory in Malaysia and not in India speaks volumes regarding the state of affairs in the domestic market for biotechnology entrepreneurs.

There are short-term, medium term and long term suggestions that ABLE believes could help the sector including the use of R&D cess to stimulate incubators, ignition grants, institutions, start-ups etc in the biotech field. Small efforts like a 10 year tax holiday for indigenously developed bio-pharma drugs, duty and exercise exemption on lifesaving medicines etc could really help the sector.

In the short term government needs to address the over burden of taxes on the sector and in the medium term start easing the policy framework to encourage bio-tech and the long term investment, we believe, will naturally flow because of the huge potential in the country.

The industry is such that with the investment of $4-5 billion over the next five years can bring the sector to a whopping $ 100 billion industry with a 25 percent return on investment and a 30 per cent growth rate year on year. And there will be no loss to the government exchequer as investment can be brought in from various sources like creating a pool of CSR expenditure of certain sector companies that could help research in life saving drugs based on bio-tech.

How can the sector help India grow?
It is not just India that will be benefit from the growth of the biotechnology industry, the whole world will benefit. Take for instance the example of Indian generic medicines – without which where would have the famous ‘Obama care’ gone to? How could epidemics have been wiped out without Indian vaccines? We are not asking for anything extra. Just let us do what we are supposed to do as businesses, instead of creating political and legal hurdles.