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Policy Matters

AMMOI wants govt to withdraw 2% excise duty imposed on generic ASU&H drugs

Mumbai (PB): AMMOI urged the Union finance minister in a representation to withdraw 2 per cent ad valorem central excise duty imposed on the generic Ayurveda, Siddha, Unani and Homoeopathic (ASU&H) drugs from this financial year. The Association pointed out that the government should re-think on its decision as such tax imposition levied on this niche and developing sector will cripple the growth of the industry.

The association stressed that it is concerned with the lacklustre attitude of the government towards the Ayurveda industry as time and again it has ignored the issues and demands raised by the industry.

According to Dr Ramanathan Devaraj Iyer, president of AMMOI, “This is not the first time we have represented to the government on this issue. Last year when the government had imposed 1 per cent tax, we had sent a letter to the ministry demanding to withdraw the same, to which they replied by saying that they would consider it. However, we were taken by surprise when the Government in the 2012-13 budget declared that they would be increasing the tax from one per cent to two per cent instead of completely withdrawing it, adding to our woes.”

The government in the union budget for 2011-12 had imposed 1 per cent central excise duty on ayurvedic medicaments manufactured exclusively in accordance with the formulations described in the authoritative books specified in the first schedule of the drugs and cosmetics act (23 of the 1940). This year they have increased the excise duty to two percent going against the interest of the industry.

At present, there are 8000 Ayurveda medicine manufacturers units that exist in India, out of which, only about 5000 units are GMP complaint, with a turnover of Rs.8000 crore per annum. Ironically, the total central excise duty expected from this sector rounds up to Rs.150 crore only.

Dr Iyer said, “The government must withdraw this tax as even the Government does not get much revenue from this sector due to its small size. However, tax impositions like this from the central and the state government will further burden the industries woes curtailing its existence and growth. Our only point of content is why is the government being so impartial, when the government can exempt branded gold from taxation, why cannot they apply the same principle to the ASU drugs as well, which is considered as the poor persons medicine.”

Dr Iyer pointed out that the Ayurveda industry is not in a position to withstand these changes as it is going through critical phase due to increase in the cost of raw materials, cost of labour, non availability of quality raw materials and skilled workforce. He further added that AMMOI is soon planning to team up with other ASU associations from across the country so that they can further raise this issue on a national level.

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