Finmin says no to dumping duty on pharma ingredients.

NEW DELHI: The finance ministry has shot down an anti-dumping duty proposed by a key government body on import of certain drug inputs from China and Mexico for fear that prices of some popular antibiotics could flare up.

The finance ministry seldom rejects the recommendations of the Directorate General of Anti-Dumping & Allied Duties (DGAD), an offshoot of the commerce ministry, and pharma watchers were surprised by the move.

Ajay Sahai, director-general of Federation of Indian Export Organisations, said it is very unusual for the finance ministry to reject a DGAD recommendation. Even so, “we cannot say the ministry is over-stepping here,” he said, as it is well within its rights to do so.

DGAD, the nodal investigation agency that studies if an anti-dumping duty is warranted to shield domestic business against dirt-cheap imports, proposed levies of up to $18 a kg and $3.8 per billions of unit on 6-APA and on Pen G that are used to make antibiotics such as Mox, Augmentin and Sporidex.

The DGAD advice in February came after local drugmakers Alembic and SPIC, producers of these inputs, complained against cheap imports and sought the government’s protection.

Any decision on levies rests with the finance ministry and its rejection of the DGAD advice means it is curtains for the proposed duty.

A commerce department official said there was nothing DGAD could do now and if the commerce department wanted to pursue the matter, it must be done at the secretarial or ministerial level.

In recent years, a few domestic pharma companies making these drug inputs were forced to shut factories after they flailed against the onslaught of Chinese importers who rapidly dropped prices when they saw efforts to revive production at the Indian end.

But a section of the industry said the two Indian companies lacked the capacity to feed their input needs.
Bulk drugmakers that typically buy ingredients from China for making intermediary products used by antibiotics firms said the duty would have forced them to shut shop. They feared that antibiotics firms would ditch domestic bulk drugs that would cost more once the duty came into effect and flock to imports.

BR Sikri, vice-chairman of Bulk Drug Manufacturer’s Association, said thumbs-down to the proposed duty is a relief to patients and drugmakers.

Drugmakers said the duty could have raised antibiotics prices by up to 50%. The antibiotics market is valued at more than Rs 3,000 crore, or 7.5% of the total domestic retail drug market.

Source : The Economic Times