The Association for Biotechnology Led Enterprises (ABLE) has sought a relaxation of export obligations for biotech parks availing the special economic zone (SEZ) status. It has also sought a minimum requirement for setting up a biotech SEZ.

In a budget memorandum to Union finance minister P Chidambaram, ABLE has pointed out that the changes in the Foreign Trade Policy permit biotech companies in state-sponsored biotech parks to avail duty-free import of equipment, instrument and consumables; and tax holiday under Section 10A/10B of the Income Tax Act.

However, the benefits are available only to 100 per cent export-oriented biotech units and therefore similar to the benefits enjoyed by 100 per cent export-oriented units (EoUs) in other sectors.

Given the long gestation periods inherent to the nascent sector, ABLE has called for the export obligation norms to be made applicable after five years. The measure will help biotech parks attract a large number of innovative biotech companies.

Also, ABLE has recommended that the minimum area required for setting up a biotech SEZ be restricted to 25 acres or one million square feet of building area, similar to the norms specified for the IT Industry.

For the Indian companies to acquire more technology, ABLE has recommended that the import of technology by the biotech sector be exempt from Withholding Tax up to 2010.

The exemption of customs duty on the import of research and development (R&D) equipment and duty refund/drawback for R&D consumables has also been urged.

The biotech sector is capital-intensive necessitating investment in expensive R&D infrastructure. If India is to realize the potential of its scientific skill base at a commercial level, it is imperative to adopt measures that reduce the capital cost of R&D.

Another issue ABLE has raised is that of relaxation of excise duty on diagnostic kits for HIV antibodies. The industry organization wants duty exemption norms for imported life-saving drugs and diagnostics to include components for their indigenous manufacture.

ABLE recommends that the list be expanded to cover additional items essential for biotech and pharma research. In addition to these, due to the ever-changing requirement of new equipment, it is recommended that additional R&D equipment not covered in List 27A and List 28 be permitted to be imported duty-free based on DSIR certification.

(www.business-standard.com)