Union Budget 2015: R&D activities in pharmaceutical may get tax boost in Budget

The market size of the industry is around Rs 1 lakh crore.

New Delhi, Feb 15 : Finance Minister Arun Jaitley may accord enhanced tax incentives for research and development (R&D) activities in the pharmaceutical sector in the forthcoming Budget to be announced on February 28. In its Budget proposals, the Commerce Ministry has sought “weighted average tax benefit of 400 per cent for R&D activities for the sector”, a senior official told PTI. (Read: Union Budget 2015: Will Narendra Modi force Arun Jaitley to lay golden eggs? (Watch video))

“There is an urgent need to boost R&D in the pharma sector. India is the hub of generic medicines. It contributes significantly to the country’s total exports,” the official added. Annually, India exports pharmaceutical products worth USD 10 billion. The market size of the industry is around Rs 1 lakh crore.

The need for special financial package for the pharma sector has been highlighted in various fora. The pharma sector is a capital intensive sector. Besides R&D expenditure, regulatory requirements require large funds, an industry expert said. “All quality investments should be treated on par with R&D to provide incentives to the industry,” the official added.