India's 'Pharmacy of the World' Title at Risk: Urgent GST Reforms Needed for Pharma Exports

India's esteemed position as the 'Pharmacy of the World' is facing a significant challenge, as the Pharmaceutical Export Promotion Council of India (Pharmexcil) urgently appeals to the government for immediate intervention on pressing Goods and Services Tax (GST) issues. The Council, established by the Ministry of Commerce and Industry, warns that unresolved GST woes, particularly the inverted duty structure and persistent delays in refund processing, are severely impacting the pharmaceutical sector's competitiveness and working capital, jeopardizing the nation's global leadership in drug supply.

According to Pharmexcil Director General R Uday Bhaskar, the inverted duty structure, where GST on inputs is higher than on the finished product, along with a backlog of refunds, is crippling the industry.

This creates a substantial blockage of working capital, a critical resource for a sector that requires continuous investment in research, development, and expansion. The Council has vigorously advocated for remedies, including the implementation of an e-wallet mechanism for duty credit, which would provide immediate relief to exporters by simplifying and expediting the refund process.

The issue of delayed refunds has been a long-standing concern for the pharmaceutical industry.

Exporters are forced to pay GST on inputs upfront, but receive refunds only after an extended period, sometimes months. This delay ties up significant capital, particularly for small and medium-sized enterprises (SMEs), making it difficult for them to manage cash flow, invest in new technologies, or expand their production capacities.

In a global market characterized by fierce competition, such financial constraints can quickly erode a country's competitive edge.

Pharmexcil emphasizes that the pharmaceutical sector is a cornerstone of the Indian economy, not only contributing significantly to GDP but also providing millions of jobs and bolstering the nation's strategic importance in global health.

The 'Pharmacy of the World' moniker is a testament to India's capacity to produce high-quality, affordable medicines, which are vital for patients across developing and developed nations alike. Any threat to this status has far-reaching implications, potentially affecting global drug accessibility and India's economic stability.

The council's plea extends beyond just refunds, urging a comprehensive review of the GST framework as it applies to export-oriented industries.

They highlight the need for policies that actively support and incentivize exports, rather than inadvertently creating hurdles. A streamlined, efficient, and exporter-friendly GST regime is crucial for maintaining India's leadership, ensuring the sector's growth, and securing its position as a reliable global supplier of essential medicines.

The government's prompt action is essential to safeguard this invaluable national asset and ensure the continued prosperity of the Indian pharmaceutical industry.