Impact of GST has largely been positive and constructive on pharma sector

The impact of Goods and Services Tax (GST) on Pharma sector has largely been positive and constructive, according to the Minister of State for Road Transport, Highways, Shipping and Chemicals & Fertilizers, Mr. Mansukh Mandaviya.

In a statement in Parliament the Minister noted that the Pharma sector has seen a positive growth after the implementation of GST.

While annual turnover of the pharma sector before GST (as on 31.05.2017) was Rs. 1,14,231-crore, after GST as on 31.05.2018) the figure rose 6% to reach Rs. 1,31,312-crore. Likewise, exports during 2016-17 were at Rs. 2,75,852-crore, while post-GST, in 2017-18, they were recorded at Rs. 3,03,526-crore, which is 10% higher. The Minister added that as per estimates, the export figure for the current year is likely to be Rs. 3,27,700 crores, which will be almost 12% higher than the export figure in the pre-GST regime (2016-17).

Mr. Mandaviya also pointed to the significant jump in number of Drug Approvals – from 7,857 before GST (01.07.2016 to 30.06.2017) to 10,446 post-GST (01.07.2017 to 30.06.2018).

“Under the ‘One Nation, One Tax’ regime, the removal of complexity of multiple taxes has reduced their cascading effect on the final product. GST is expected to decrease the manufacturing cost in view of merging of different taxes levied earlier and promote ease of doing business. It will create one single market for all stakeholders with equal chance towards development,” Mr. Madaviya observed.

Discontinuation of Central Sales Tax post-GST, he added, will reduce transaction costs, as inter-state transaction between two dealers will become tax neutral. “Now, the pharma companies can consolidate their warehouses at strategic locations, effecting a reduction in cost of distribution. As a result, it will benefit warehouse strategy and improve supply chain efficiency in pharma sector,” the Minister added.