The finance ministry has withdrawn customs duty exemption on a number of imported drugs, including branded medicines for treatment of cancer and other life-threatening diseases, in a move that could push up prices of some life-saving drugs sharply.
The Central Board of Excise and Customs (CBEC), in a recent notification, removed a number of life-saving drugs and bulk drugs used for manufacturing these drugs as also diagnostic kits from customs duty exemptions.
The finance ministry had, in 2012, exempted six specific life-saving drugs and vaccines from excise duty to cut down their prices and make them more affordable.
Now, with the withdrawal of duty exemptions, those imported drugs as well as those manufactured in special economic zones from imported bulk drugs will now be taxed at rates of up to 22 per cent.
These include drugs, such as recombinant human erythropoietin, which is used for dialysis, anti-retroviral medicines and filgrastim that is used for chemotherapy.
The move is part of Prime Minister Narendra Modi's `Make in India' campaign by encouraging local production of these drugs.
The idea is that drug firms may find it worthwhile to manufacture these locally rather than import them at higher costs. Some of these medicines have generic equivalents also.
However, the move has raised concerns over these drugs becoming more expensive for patients.
Also, with the rupee depreciating further passing on the costs will hurt patients, especially those from low income brackets.
Earlier this year, the government had also increased the basic customs duty rate on specified medical devices to 7.5 per cent and had also withdrawn the 4 per cent exemption from additional customs duty on them.
However, it had reduced the basic customs duty to 2.5 per cent on raw materials, parts and accessories for these and also exempted them from SAD to promote local manufacture of medical devices.
''These changes are expected to provide impetuous to the domestic medical devices sector, support the Make in India campaign of the Government and generate employment,'' the finance ministry had said at the time.