Among all industries, the pharmaceutical sector will perhaps benefit the most from the withdrawal of the ill-conceived fringe benefit tax, as it spends a minimum of 15 per cent of its turnover on medical representatives and sales promotion.
The industry also expects to benefit indirectly from the proposal to cover all below poverty line families under the Rashtriya Swasthya Bima Yojana with a 40 per cent increase in allocation, as it should help penetration of healthcare in rural areas.
Apart from this, the pharmaceutical industry seems to have got little directly out of this year's budget presented on Monday by finance minister Pranab Mukherjee. But then it was expecting little, so there is no particular sense of disappointment.
The considerable cut in import duties on certain life-saving drugs and devices has been welcomed, as well as the fact that excise duty has at least not been hiked. As Piramal Healthcare Director Swati Piramal said, "We didn't expect much from the budget as the pharma industry is not very dependent on duties. However, we are pleased that the government has not increased the excise duty.''
Ernst & Young partner and national Leader, health sciences practice, Hitesh Sharma agrees that the status quo on excise duty will help the industry grow across states.
But certainly the government could have done more to boost health infrastructure and tried to give a fillip to small-scale manufacturers in the tax-free zones, say industry players.