Govt considering hike in API import duties

“This is one of the ideas under Atma Nirbhar Bharat. We can make many APIs, but there is a cost disadvantage. The manufacturing capacity here is smaller right now compared to some other countries where the industry is manufacturing at a larger scale, making it difficult for our manufacturers to compete as it is cheaper to import,” said the person.

India currently imposes a basic customs duty of around 10 percent on APIs. “The proportion of the hike has not been decided yet, as the discussions are still in the early stages,” the person said, adding that the move is being considered in order to ensure a “level playing field” for domestic manufacturers, so that they can compete with foreign manufacturers while they try to scale up capacity.

“There is a concern about the impact of increasing duties on the cost of manufacturing finished formulations using these APIs. If the duties are hiked, the corresponding prices of the medicines will also be increased. It will be taken into account in the discussions,” the person added.

In the event that discussions proceed, DoP is likely to seek inputs from industry bodies on which APIs should be considered for such hikes.

However, it is learnt that some industry executives involved in the discussions so far have suggested that the hikes be imposed on 53 APIs already targeted by the government through its bulk drug parks and production-linked incentive schemes announced in March. Of these APIs, at least 20 are currently manufactured in the country, said an executive.

“These can be made by our domestic manufacturers, but they have been suffering at the hands of cheaper imports, delayed environmental clearances and, in some cases, the need for upgradation of technology,” said the executive.

India is currently dependent on China for nearly 70 percent of the bulk drugs it imports. It is also heavily reliant on China for fermentation-based APIs, which industry bodies claim are not manufactured in other countries.

Another industry executive earlier told The Indian Express that India used to have the ability to manufacture these fermentation-based APIs nearly 30 years ago, but cheaper alternatives from China killed this industry.