R&D activities in pharma may get tax boost in Budget

Finance Minister Arun Jaitley may accord enhanced tax incentives for research and development (R&D) activities in the pharmaceutical sector in the forthcoming Budget to be announced on February 28.

In its Budget proposals, the Commerce Ministry has sought "weighted average tax benefit of 400% for R&D activities for the sector", a senior official told PTI.

"There is an urgent need to boost R&D in the pharma sector. India is the hub of generic medicines. It contributes significantly to the country's total exports," the official added.

Annually, India exports pharmaceutical products worth $10 billion. The market size of the industry is around Rs 1 lakh crore.

The need for special financial package for the pharma sector has been highlighted in various fora.

The pharma sector is a capital intensive sector. Besides R&D expenditure, regulatory requirements require large funds, an industry expert said.

"All quality investments should be treated on par with R&D to provide incentives to the industry," the official added.