Budget 2012: No booster shot for biotech

With each passing year the finance minister seems to be getting nowhere near addressing the wish list of the biotechnology sector that has been awaiting the booster shot year after year.
This year, too, Pranab Mukherjee had nothing much to offer this critical sector that has been waiting with bated breath for sops and incentives.
The only cause for some cheer was that the weighted deduction of 200% on expenditure on in-house R&D facility has been extended for five years beyond March 31, 2012.Also, there is hope that his pronouncements on enhancing immunization coverage will boost government spending on vaccinations, bringing some gains for vaccine makers.
“The Budget is rhetoric rather than reformist in nature. Extending the weighted deduction benefit for 5 years is a welcome move but we were expecting R&D sops and co-investment opportunities to drive innovation that didn’t come through,” said Biocon CMD Kiran Mazumdar-Shaw. Association of Biotechnology Led Enterprises executive co- uncil member and Kotak Private Equity CEO Nitin Deshmukh too was disappointed that there were no major announcements to spur innovation and growth of the sector. He, however, felt that small biotech firms starved of venture capital funding may benefit from the Rs 5,000 crore allocated to SIDBI for MSMEs even as the Rs 200 crore allocation for development of new technologies for seeds and plants and a Rs 350 grant for agri universities would provide some impetus.
To add insult to injury, the hike in excise duty rates and service tax is expected to put pressure on the margins. “It’s disappointing because the excise duty is up from 1% to 2% and as we do not get Cenvat credit and raw material costs will go up,” said K V Balasubramaniam, MD, Indian Immunologicals Ltd.
“There is no fresh proposal that will give an impetus to research and development in biotechnology. The government should remove taxes on intellectual property licensing. We are forced to rethink our strategy,” said Villoo Morawala-Patell, CMD, Avesthagen.
Budget 2012
Budget News 2012