Traders seek margins including excise duty – Cover Story – Express Pharma Pulse

Traders seek margins including excise duty

Megha Lodha – Mumbai

Amidst talks of the excise duty reductions and the implementation of the Value Added Tax (VAT) bringing in changes for the pharmaceutical industry, the traders have put in a new demand asking the industry to further increase their trade margins.

The All India Organisation of Chemists and Druggists (AIOCD) has demanded a rise in the trade margins after two decades, said AIOCD honourary general secretary, Jagannath Shinde. Speaking to Express Pharma Pulse, Shinde said that the new demand would ask for the trade margins including the excise duty. He said that the traders want uniform margin across the country irrespective of the size of the companies; the new demand would be applicable to all pharma companies, big or small, domestic or multinational.

As per the new demand, wholesalers should get a margin of eight per cent including excise duty in the controlled formulations category and retailers 16 per cent excluding the excise duty, while in the decontrolled formulations, the wholesalers should get ten per cent and retailers 20 per cent, including excise duty. As of now, the

percentage of margins is the same, but it does not include the excise duty.

Shinde further said that this demand has already been put forward to three other associations, namely, the Indian Drug Manufacturers’ Association (IDMA), the Organisation of Pharmaceutical Producers of India (OPPI) and the PAMDAL.

There have been two rounds of talks already and the third and final round will be on Oct 28, 2004, informed Shinde. However, if this round of talks fails, that is, if the demands of the AIOCD are not agreed upon, the next plan of action would be decided upon by the AIOCD members when it meets with its executives in Ahmedabad. It is likely then that the organisation approaches companies individually to fulfil their demand.

However, the OPPI and IDMA hold a different viewpoint. While the taskforce formed by these bodies regarding this issue would be meeting to decide on what needs to be done, they would want to honour the Memorandum of Understanding (MoU) signed by the three parties AIOCD, IDMA, and OPPI) a couple of months ago. This recent demand is against the sanctity of the MoU agreed upon, said Dr Ajit Dangi, secretary general of the OPPI.

Said Dara Patel, secretary of the IDMA, “The union ministry is already upset with the high trade margins being given out.” While the decision of the taskforce would be out only after the meeting, Patel said that those companies that have been giving the margins including the excise duty for sometime now, can continue to do so and that it would not lead to any problems.

“Paswan is talking of lowering the excise duty, the VAT regime is to come into existence and there is a new budget coming in February. In such a scenario, it would be difficult to tinker with the MoU. It would be better to hold on till we get clarity on the excise duty, the execution of VAT,” added Dangi. He stressed that the “MoU needs to be honoured.”