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Even as the Indian pharma sector is gearing up for the transition to the Goods and Services Tax (GST) regime from July 1, the industry players in Madhya Pradesh have called for more clarity on the new tax policies.
According to industry leaders, the traders, concerned over the new tax system, have stopped buying medicines from the companies and returning stocks of products back to the manufacturers. The wholesale and retail dealers are reluctant to stock medicines in their storage facilities foreseeing unfavorable business climate in the market from July 1.
“Traders and distributors across the state have stopped lifting medicine stocks from manufacturers. This has affected the supply of medicines to patients and lot of stocks is getting piled up with the manufacturers, and as a result manufacturers have slowed down their production” sources from the industry informed.
Dr S B Rijhwani, the former chairman of MP IPA and the managing director of Prochem Pharmaceuticals in Indore, said “though we consider the GST as the biggest tax reform after independence, there are confusions and concerns over the new tax system as it lacks clarity on several areas. The government must clear the gray areas before the implementation of the new tax regime. Since medicines are essential commodities, it is the duty of the government to give clarity on the issues related to pharma. Now we are all concerned over the impact of the GST on our business”.
Dr. Rijhwani has sent a letter to the Department of Pharmaceuticals in this regard. The major concern the industry wanted to inform the government was that there would be an acute shortage of medicines, especially drugs for life-style diseases in the near future. To avoid such a situation, government should take steps making the traders confident to face implications of GST, he said in the letter.
Meanwhile, the Department of Pharmaceuticals, has constituted a ‘GST Facilitation Cell’ vide Office Memorandum dated 14.06.2017 consisting of 3 officers for addressing any issue related to GST in pharmaceutical sector. The Cell will be in constant touch with the major industry and business associations and sectoral groups on drugs and pharmaceuticals and will serve as the first on contact for addressing any issue relating to the pharma sector, said the circular issued by NPPA.
Dr. Rijhwani wanted the government to clarify whether government will compensate if any loss occurs to the pharmaceutical sector due to the introduction of GST.
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