A new dawn for sinking SSI units

Prashant Srivastava / TNN / Dec 22, 2005, 03:24 IST

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A tripartite meeting was called by the department of industries, the Udyog Bandhu and the Uttar Pradesh Drug Manufacturers Association.

LUCKNOW: It seems that ball has finally started rolling. The state administrative machinery is showing a 'renewed' interest in solving the problems of small scale pharma industries of the state which are on the verge of collapsing, thanks to the revised schedule M of the Good Manufacturing Practices (GMP) propounded by WHO.
A tripartite meeting was called by the department of industries (government of UP), the Udyog Bandhu and the Uttar Pradesh Drug Manufacturers Association (UPDMA) on Wednesday.
The meeting, which was chaired by principal secretary (handicraft) Ravinder Singh, acting under the guidance of the Industrial Development Commissioner, had a sense of purpose and urgency attached to it, which was missing during last six months.
The critical issue of implementation of revised schedule M, which requires heavy financial investments and the foreseeable threat of cheaper drug flooding in from the markets of Uttranchal were discussed at large.

According to sources, the principal secretary showed a keen interest in taking action and not delaying the issue for further deliberation as has been the case in past few months.
It's worth mentioning that implementation of revised schedule M is lying in a state of suspended animation for the last six months and after December 31, the office of the state drug controller will be free to inspect the manufacturing premises of these three hundred units and order closure on the basis of non-implementation of the said norms.

This will spell doom for the industry which supports almost 15,000 families in the state. The TOI has been carrying a series of reports since April highlighting the plight of ailing SSI pharma units.
The principal secretary has given signals that a corpus might be generated from the trade tax being paid by these units on maximum retail price (MRP), which can be used by them in obtaining interest-free loans and implementing schedule M to the desired specification and carry on their business.
This corpus might amount to Rs 200 crore. Gujarat has already gone ahead and created a corpus of Rs 750 crore for its 960 small pharma units.
Modalities of how to balance the difference between the high rate of taxation in Uttar Pradesh and the lower rate prevailing in Uttaranchal was also discussed.
The principal secretary demanded that UPDMA provided his office with the exact differentials so that prompt action could be taken. The preliminary data suggests that in UP the trade tax being charged (including development tax) stood at 9 per cent and the Central Sales Tax (CST) is 4 per cent.
Whereas, in Uttaranchal the trade tax is charged at 4 per cent and the CST amounts to 1 per cent only. Thanks to its Special Economic Zone (SEZ) status, Uttaranchal also enjoys the privilege of being an excise free destination for production.
UPDMA also mooted the idea of levying an entry tax on products coming from outside the state and also sought a relook in state drug purchasing policy.
The principal secretary assured them of a meeting in very near future where representations from state drug controller, the Udyog Bandhu, director general medical and health and trade tax department will be made to sort out all the issues for the sake of welfare of industry, in one go. One can only hope that the initiatives taken at this meeting augurs well for the dying industries.

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