CEMENT INDUSTRY

Domestic cement prices may come under pressure due to the reduction of customs duty from 38.5% to 25%. However the cement manufacturers remain unfazed by the move and say the lower import duty will not have much of an impact on the local industry. Cement prices in India are very competitive and imported cement will cost not less than Rs 210 per bag as against Indian price of Rs 160 to Rs 190 per bag.

STEEL INDUSTRY

Tax holidays for infrastructure projects and lower prices of imported coal (following scrapping of surcharge on custom duty) will boost consumption of steel. However, the removal of the 10% surcharge on customs duty, reducing the peak import duty for steel by 3.5% will make imports marginally cheaper. For the Steel Authority of India (SAI), the reduction in import duty on coal will lower the import bill by around RS 60 crore per annum.

BIOTECHNOLOGY

The FM has announced a 150% weighted tax reduction for companies investing in Research and Development (R&D) activity. This deduction will be given to expenditure by the industry on R&D in Biotechnology, Clinical Trial, Filing of Patents and in obtaining regulatory approvals. Also, a special concession has been made to industries sponsoring or participating in the New Millennium India Technology Leadership Initiatives (NMITLI) with a 125% weighted deduction on the entire amount paid. The schemes announced are intended to boost R&D investments by the industry, which is critical to facing global competition.

PHARMACEUTICALS

The pharmaceutical industry has been given a shot in the arm by the announcement of R&D activities now being entitled to a tax break and a reduced customs duty level. The desire to reduce the scope of drug price control will enthuse the entire industry as the control on drug process has been an irritant for the industry. For some of the more popular antibiotics, intense competition has driven the price below the ceiling imposed by the government. Selective decontrol is unlikely to raise the prices because of competition. The decision to reduce customs duty from 38.5% to 35% is likely to benefit most of the MNCs.

|