Budget 2024: Pharma sector seeks tax sops, effective intellectual property rights regime

Budget: There is a need to incentivise R&D investments, offer corporate tax concessions and establish an effective intellectual property rights regime in order to push the growth of domestic pharmaceutical industry, as per the industry bodies.

Outlining the sector's wish list for the upcoming Union Budget, Organisation of Pharmaceutical Producers of India (OPPI) Director General Anil Matai urged the government to explore methods to incentivise R&D investments, such as deductions on R&D expenses, research-linked incentives for MNCs, and corporate tax concessions. The initiatives will help in accelerating R&D and innovation in the sector, he added.

"Recognising the high-risk, long-gestation nature of R&D, we suggest extending the scope of section 115BAB of the Income Tax Act, 1961 to companies solely engaged in pharmaceutical research and development and providing a 200 per cent deduction rate on R&D expenditures," Matai said. This would significantly boost the sector's ability to undertake essential research and development, including clinical trials and patent registration, he added.

Matai also sought establishing an effective intellectual property rights regime for driving growth and encouraging research-based pharma companies, both global and domestic, to introduce innovative therapies in India towards addressing unmet medical needs. "Incentives for developing treatments for rare diseases are also crucial," Matai said.