Govt needs to make policy to lower production cost in API

India imports about $3.5 billion worth of APIs from China which comprises more than 70 per cent of its requirements.

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Stressing that the Central government needs to formulate an appropriate industrial policy to lower the cost of production and provide more incentives to attract investors into the active pharmaceutical ingredient (API) manufacturing sector.

A leading API industry analyst Shashikanth Mishra felt that the Central government is trying to wash off its hands from its responsibilities by providing few short term incentives for API entrepreneurs.

Mishra said, “If we want Indian pharma firms not to depend excessively on China for some of the important APIs and key starting materials (KSM), it is very important for the government to act in the right time at the right place.

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Even though the Central government had taken some steps since 2015 onwards to improve the API sector in India, even though 6 years have gone past, nothing concrete has been emerged out of those initiatives as the pharma sector is still depending on China for its APIs and KSMs even today,” observed Mishra.


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Citing the statistics, Mishra said that India imports about $3.5 billion worth of APIs from China which comprises more than 70 per cent of its requirements.

Though the government policy makers in India viewed that such a high dependence on imports of APIs would have strategic dimensions and undermine public health, despite such a grave concern India still imported APIs worth of Rs. 17,400 crore during the financial year 2019.

“The most worrying thing is that India’s dependence on China for some of the life-saving antibiotics like cephalosporins, azithromycin and penicillin is more than 90 per cent.

Therefore it is very important for our policy makers to think on those lines and must ensure at least these life-saving medicines are manufactured in India, which would otherwise jeopardize the entire public health system if the supply of such medicines is suddenly stopped due to any kind of untoward incidents between these two countries,” opined Mishra.

In view of the above, Mishra suggested that the Central government must formulate an appropriate industrial policy which aims to lower the cost of production in areas with a strong export potential (such as APIs) for the pharmaceuticals sector.

He also advised that the government must create common infrastructure facilities for the API sector which can reduce the operational costs for the industry.

The industry expert also felt that although a new bulk drug scheme has been announced but the need of the hour is a single window clearance to expedite its implementation.

He suggested that India needs to step up manufacturing APIs for its own captive use, for which government needs to provide adequate subsidies for Greenfield investment in the API sector.

It is also felt that government has offered production linked tax incentives for firms to make the API space to be more competitive.

If there is lower cost of capital, it will assist the firms operating in the Indian API and intermediates space, opined Mishra, giving his perspective on API sector in India.


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