10-Year Tax Holiday For Pharma R&D Mooted

The government is planning to grant a 10-year tax holiday to pharmaceutical companies involved in research and development in the country. “We are strongly favouring such a step for encouraging R&D in the country, as this acquires additional importance in the product patenting regime,' said JS Sandhu, joint secretary in the ministry of chemicals and petrochemicals, which is the administrative ministry for phramaceuticals. The details of the policy, such as the criteria for companies to qualify for this tax benefit, are being worked out. Once finalised, the proposal will be sent to the finance ministry for approval. The pharmaceutical industry now enjoys a tax exemption of 150 per cent of the amount invested in research and development, but it was initially granted for five years and then extended by another two years. A 10-year span will pander to a long-standing demand of the industry, which has been saying that pharma R&D cannot be tied down in strict time-frames. R&D investments by Indian pharma companies have increased manifold in recent years and are likely to continue the climb. The top 12 spent a record Rs 1,063 crore in 2004-05, a rise of 41.5 per cent over the previous year.