Lok Sabha Question No. 2588 (UNSTARRED), answered on 2017-03-17
Subject: Customs Duty Exemptions
Ministry: FINANCE
Asked by: B.V. NAYAK, S.P. MUDDAHANUMEGOWDA

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

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## LOK SABHA

## UNSTARRED QUESTION NO. 2588

## TO BE ANSWERED ON FRIDAY THE 17 TH  MARCH, 2017 PHALGUNA 26, 1938 (SAKA)

## CUSTOMS DUTY EXEMPTIONS

## 2588.SHRI B.V.NAIK:

## SHRI S.P.MUDDAHANUME GOWDA:

Will the Minister of FINANCE be pleased to state:

- (a)whether  the  Government  has  issued  notification  to  withdraw  customs  duty exemptions on import of 76 medicines including life saving drugs;
- (b) if so, the details thereof;
- (c)  whether  the  Government  is  aware  that  such  move  to  withdraw  exemptions  on import  of  these  drugs  is  likely  to  increase  price  of  life  saving  drugs  in  domestic markets and prove fatal for the health of poor patients;
- (d) if so, the details thereof; and
- (e) the steps taken/being taken to reconsider the said proposal in the interest of poor patients?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SANTOSH KUMAR GANGWAR)

(a), (b), (c), (d) & (e): Representations were received from domestic industry stating, inter alia, that the exemption / concessional customs duties on specified drugs deters domestic manufacture of these lifesaving drugs. Accordingly, in consultation with the stakeholders including Ministry of Health and Family Welfare and the Department of Pharmaceuticals,  exemption  /  concessional  customs  duties  on  76  specified  drugs was  withdrawn,  vide  notification  of  the  Government  of  India,  Ministry  of  Finance (Department  of  Revenue)  No.  6/2016-Customs,  dated  the  28th  January,  2016 [G.S.R. No. 124(E) dated 28th January, 2016], so as to eliminate the disadvantage to the domestic manufacturers of such drugs.

Subsequent  to  the  withdrawal  of  the  exemption  /  concessional  customs duties,  a  Committee  comprising  of  representatives  of  Ministry  of  Health  &  Family Welfare,  Department  of  Pharmaceuticals,  Director  General  of  Health  Services, Department of  Revenue,  National  Pharmaceutical  Pricing  Authority,  Central  Drugs Standards  Control  Organization,    National  AIDS  Control  Programme  and  experts from All India Institute of Medical Sciences, Safdarjung Hospital  and  Ram ManoharLohia Hospital, was constituted in the Ministry of Health and Family Welfare to assess the impact of withdrawal of customs duties exemption / concession on the 76 drugs.

Keeping  in  view  the  likely  impact  on  the  prices  and  availability  of  these  drugs, Ministry  of  Health  and  Family  Welfare  recommended  to  restore  exemption  / concession of customs duties on three drugs, namely, Octreotide; Somatropin; and Anti-Haemophilic factor concentrate VIII & IX. Accordingly, the exemption / concessional customs duties was restored on these 3 drugs vide notification of the Government  of  India,  Ministry  of  Finance  (Department  of  Revenue)  No.  10/2016Customs, dated the 17th February, 2016 [G.S.R. No. 177(E) dated 17th February, 2016]

Further, the price of drugs included in the National List of Essential Medicines (NLEM) is linked to the increase/ decrease in the Wholesale Price Index (WPI) in terms of Drugs Price Control Order (DPCO), 2013. Most of the drugs in respect of which custom duty exemption has been withdrawn are included in the NLEM, 2015. Since the WPI for the current year is likely to decline, the price of these drugs will also decline. Also, even in respect of non-scheduled drugs, i.e those drugs which are not  included in  the  NLEM  and  DPCO, the annual increase in the Maximum Retail Price (MRP) cannot be more than 10%.

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