Congress and its Rafale delusion!

The conduct of Congress party in the whole affair of procurement of combat jets shows a complete disregard for national security and preference for private illicit enrichment over national interests. In all this din over the Rafale deal, it was almost forgotten that the Indian Airforce badly needed to bolster its squadron strength in view of the obsolescence of some categories of its fighter jets and that the in-principle approval for the procurement of 126 fighter jets was given way back in 2001. The dire straits of aging fleet were evident in the skirmishes that took place between Indian Air Force and Pakistan Air Force over LOC.

Congress President Rahul Gandhi’s attack on Rafale deal is based on lies and he has manufactured a lot of them in the last few months. He first alleged that there was no Indo-French secrecy clause in the Rafale deal. This was denied by the French President. He then went on to say that Narendra Modi pressurized Dassault to sub-contract to Anil Ambani. This was denied by Dassault Aviation. A fake audio tape was also attempted to be presented by Rahul Gandhi during the debate on Rafale in the Parliament and when he was asked to vouch for its authenticity, he withdrew it. In the latest addition to this list, Rahul Gandhi referred to his conversation with late Shri Manohar Parrikar, which apparently took place during his brief courtesy meeting with the ex-defence minister, while the fact is that no such conversation took place during that meeting.

Repeated attempts have been made to question the pricing.Details regarding pricing have been reported by almost every defence reporter long back. The MMRCA negotiation with Rafale talked of basic price of Rs. 550 crores plus inflation and exchange rate fluctuations. The adjusted price of a basic aircraft under the MMRCA would have been Rs. 737 crore whereas the price negotiated under the current deal is Rs. 650 crore, which is 9 percent cheaper. The defence ministry has time and again said that total cost and number of aircrafts is already in public domain but details of equipment and their prices are of confidential in nature and covered by the Indo-French security agreement of 2008. Disclosing details of arms and ammunition fitted to these fighter jets will defeat the purpose of high-end fighter planes.The government has also managed to negotiate a better maintenance and serviceability deal with Rafale.

The Congress is also misleading on the offset clause as the procurement under the offset clause is based on payment schedule and can be for any product covered under it and is not for Rafale spare parts alone. Solvency challenges of Anil Ambani group of companies makes him an easy target now and has been singled out from the offset partners of Dassault, which are 120 in number. I would like to remind that it was Congress led UPA government that had allowed Anil Ambani group to commercially sell coal from mines that were allotted to it under the Ultra Mega Power Project (UMPP) for captive use - this exception was made only for him at a time when the coal prices were going through the roof. Crony capitalism is in the DNA of Congress.

All the details pertaining to the Rafale deal were shared with the Supreme Court in a sealed cover. It was also informed that the CAG had been given access to all the files related to Rafale deal and the CAG report will be placed before the Parliamentary Committee. After going through the details of pricing and other terms and conditions, the Court had said that due process of procurement was followed and refused to order an investigation as sought by petitioners. Review petitions filed in the matter are likely to meet the same fate. Even the CAG report has given clean chit to the government.

Recently, a newspaper article, quoted details that are not even part of the official Rafale file. They were actually explanation notes on the matter after some media reported stories on Rafale. Moreover, there is question that why only 36 jets. The question is when did the government close the option for additional Rafales? The government is also questioned on the missed opportunity to make full use of the leverage provided by the new offer from the Eurofighter Consortium. The government has rightly said that entertaining the new offer at that stage was impermissible under the DPP and also a violation of CVC guidelines and would have further delayed the procurement.  

A lot of noise is also made about the deal being given go ahead by 4-3 decision. This dissent within the Indian Negotiating Team was answered by the Defence minister in the Parliament wherein she had said that in the highest traditions of the civil services, all views were aired and recorded and a collegiate decision taken after considering such opinions. Also all the decisions were also taken after due process of inter-ministerial consultations as per defence procurement process.

The biggest irony of Congress’ campaign on Rafale is the fact that an inter governmental agreement (IGA) is being compared to a tender process that did not materialize. One can insert a number of supposedly ‘favourable’ conditions in the tendering process the final outcome of which is subject to negotiations. Intransigence on these conditions can lead to a breakdown of the negotiations. To compare negotiable terms under such a ‘non-deal’ to an actual agreement is unreasonable in every manner. IGA also eliminated middlemen and commission agents that had become a bane of all defense procurements through open tendering process.

The Congress demand for joint parliamentary committee (JPC) to investigate the deal is not fair as the Supreme Court has already given clean chit andthe review petition is pending, CAG report is already with the Parliamentary Standing Committee and as such presently there are no adverse reports on evidences except unsubstantiated allegations that don’t add up.The Congress and its sympathizers have failed to come up with any proof that could implicate the government. Every question on the issue of Rafale deal has been answered from the floor of the Parliament. Congress and its cohorts are still repeating lies because its intent is to sow seeds of doubt in the minds of Indian public.

The greed of Congress had ensured that there was no contract for the supply of newer fighter jets even after Rafale was declared as L1. Every single day’s delay was compromising our defense preparedness and national security. So far as the so called scam of Congress is concerned, it can cry itself hoarse; Government, BJP and the people of India have much better things to do.

The ever skeptic opposition fails in its design

Latin philosopher René Descartes’ proposition I think therefore I am loosely means we cannot doubt our own existence but Indian politicians have started doubting anything and everything including valor of our armed forces just to give politics in India their own hue. I doubt therefore I exist seems to be the new normal for the opposition political parties in India in a situation when the country is under severe terror threat from across the border. It is dealing with the strategy of thousand cuts inflicted upon it by its neighbouring country in a proxy war. Our armed forces have been answering them without fail and with an unparalleled courage.

But the way opposition political parties are responding to the offensive of the armed forces against terrorists as if the very existence of Opposition block in the country will be in jeopardy if they don’t doubt it. Actually there is a motive and narrative behind it and the motive is to please minority vote bank. The opposition is working on this premise that by such action minority community will be pleased and vote for them even if they take such stand which is actually harming the interest of the country. So they doubt anything and everything done by the Bharatiya Janata Party government in the country. It appears that anything done by the BJP government even on issues related to security of the country must pass through the scrutiny of the Opposition. But the magnitude of the antagonism is such that it seems they are suffering from some disorder by repeating same thing again and again. On the contrary anything done by the so-called Opposition is self certificatory.

Let’s see where the Opposition political parties are in doubt. Opposition parties doubt the very claim of the government that it had hit the terrorist camp of Jaish e Mohammad led by Masood Azhar at Balakot in Pakistan in which it is expected that over 250 to 300 terrorists were neutralized. But Opposition parties including the principal opposition Congress demands from the government the exact number of terrorists killed in the attack to be given. Similarly the opposition parties doubted the first-ever surgical strike conducted by the Indian armed forces in which not only launch pad of terrorists was demolished but dozens of terrorists too were eliminated. But in this case also the opposition parties are demanding proof right from the time go.

They also doubt economic growth of the country, doubt the GDP numbers, number of beneficiaries of the government schemes, employment generated with schemes like Skill India, Start Ups, Stand Ups, MUDRA, Seekho and Kamao, schemes like USTAD and many more. As per the government records, these schemes have generated around 15 crore jobs but opposition behaving like a broken record of yesteryear and does not want to come out of the same very state of mind on every issue. It doubts electronic voting machine, it doubts Supreme Court, it doubts CAG, it doubts CBI, it selectively doubts the Supreme Court and it doubts Election Commission of India.

It questions Speaker of the Lok Sabha, it again selectively doubts Indian media but relies upon western media which in most of the cases parasite of India media. They doubt many other institutions of the country. But it works on certain pre-decided schemes like everything done by the BJP government will be doubted and attempt would be made to embarrass the government even on the issues related to the national security. So much so that even the nuclear test conducted by the Bharatiya Janata Party government led by Atal Bihari Vajpayee government was doubted for its claim on the intensity of the explosion. They had doubted the government at the time of Kargil War.

There is a section that had gone to the extent of saying that Mumbai attack (26/11) was the handiwork of the RSS in which Azmal Kasab was caught red handed and later on hanged to death. A book also got published by an Urdu journalized which was released by none other than the Congress general secretary Digvijaya Singh. Lalu Yadav gave the theory that Godhara train was burnt by Karsevak themselves who were traveling inside. Former Union Home Minister Chidambaram asked for the exact number if it was 300 or 350. There is a long list of such questions being asked by the opposition and they work on the strategy shoot and scoot. But the strategy of opposition does not seem to working with the present dispensation at the Centre as there is no one to buy their perpetual doubting state of mind. The government has enough proofs to support its action from economic development to national security.

Why government must spend more

One does not need to go too far back in history to recollect the precarious situation of the Indian economy. When the current government took over in 2014, the declared fiscal deficit was at 4.5 per cent while the actual was estimated to be in the range of 5.5 per cent. The gap between these two figures was because the UPA government incurred off balance-sheet expenses like oil bonds (issued to the tune of Rs 1,42,202 crore and not reflected in government accounts), withheld income tax refunds and rolled over, to the next year, payments which would have ideally come in towards the end of financial year 2013-14. It was creative accounting at its best. Coupled with weakness on the external account, India was part of a group that was informally referred to as the “fragile five” — countries being the weakest links in the global economy.

The Modi government went about managing its financial affairs in a very prudent manner. Falling global oil prices were leveraged to generate better revenue for the government. Measures like demonetisation and the Goods and Services Tax (GST) were launched, establishing audit trail and ownership of money and simplification in indirect tax structure. Macroeconomic parameters like inflation and fiscal deficit have been contained, the current account deficit is manageable and foreign exchange reserves and GDP growth rates are inching higher. In doing so, the government has not sacrificed any essential expenditure. As per the publicly available data, the 2014-15 to 2018-19 period has seen the best combination of GDP growth rate (high) and inflation (low) than any other government in the history of independent India. Success on the macro-economic management front has been one of the biggest achievements of the Modi government and like many other achievements of this government, has been unduly ignored by the mainstream media. We are not only one of the fastest-growing economy, but also the sixth-largest economy in the world. PwC’s annual Global Economy Watch report projects India’s real GDP growth in 2019-20 at 7.6 per cent and accordingly, India is likely to surpass UK in 2019 rankings of world’s largest economies and occupy the fifth position.

The incumbent government is not chasing macro-economic parameters; you look for growth in the economy, hand-hold sectors that need support and do not chase parameters like a certain level of fiscal deficit. At the centre of all initiatives is the ordinary citizen of India and the goal is to ameliorate her condition of living. The target is to achieve a higher level of GDP growth and to make it as wide and participative as possible. In the roadmap for doing so, macroeconomic parameters are self-imposed road signs. These numbers are not sacrosanct. There may be times when we can justifiably ignore these limiting factors. Finance Minister Arun Jaitley has said in unequivocal terms that the government would consider ground realities while making its economic policies.

Currently, agriculture and allied sectors are facing some challenges due to lack of sufficient demand for their output. The Micro, Small and Medium Enterprises (MSMEs) sector is another segment that is facing headwinds due to lack of liquidity in the financial system and lack of demand. Increased demand brings in private investment and if there is resource constraint with the government, fiscal expansion is the way out.

The economy will grow only when there is sufficient demand. Government expenditure has increased tremendously in the last five years and sectors like steel and cement have benefited immensely. However, private consumption and investment demands need to increase further. For this there is scope for expansionary fiscal policies, particularly when inflation is low. Fiscal discipline during the last five years has been one of the best and has given the government the elbow room to boost expenditure. The government might consider measures like interest subvention on agricultural loans, direct cash transfer to farmers based on their landholdings, relaxation in income tax slabs for the lower-middle and the middle class and injection of liquidity in the financial sector to boost credit availability. These measures might put some upward pressure on inflation which might not be such a bad thing. Cash transfers to farmers are constrained by the lack of updated land records with the state governments and a way around it must be found. Such a transfer will boost demand for agricultural and non-agricultural products in the rural areas and help the agriculture and MSME sectors.

Governments and economies exist for the people and not the other way round. Accolades from foreign rating agencies and media cannot compensate for the suffering of the people and our government knows this very well.

Fruits of Focused Approach

 Fruits of Focused Approach

The Modi Government’s focus on promoting in ‘Ease of Doing Business’ is driven by the philosophy of ‘Minimum Government, Maximum Governance’

The Doing Business 2019 Report of the World Bank has ranked India at 77th position in terms of ‘Ease of Doing Business’ (EoDB), an improvement of 23 ranks over the last year. In the last two years, India has improved its rank by a massive 53 positions and looks set to storm into Top 50 by next year, a target the Modi Government set, when it came to power in 2014. This improvement is being made possible because the Government believes that Indian youth are full of entrepreneurial energy, which the economy and the country were failing to harness and something had to be done about it and therefore it invested its political capital and energy in it.

 Top 10 Most Reforming Economies

It is not only the improvement in ranking of EoDB, but India is amongst the top 10 most reforming economies. In fact, Djibouti and India are the only economies to make to the list of 10 top improvers for the second consecutive year. We have made significant achievement in ‘dealing with construction permits’ (184 to 52), ‘getting electricity’ (137 to 24), ‘trading across borders’ (126 to 80) and ‘resolving insolvency’ (137 to 108) from the year 2014 to 2018 respectively in these catagories. In fact, if we compare India’s ranking on the 10 parameters of EoDB for the year 2014 and 2018, we see we have improved on all the parameters except for ‘registering property’.

Concerted efforts have been made to eliminate the ‘Inspector Raj’ and simplify compliances further. Under the latest changes made by PM Narendra Modi for Micro Small & Medium Enterprises (MSMEs) under PSB-59 initiatives, factory inspections will be done only through a computerised random allotment and inspectors must upload their reports on the portal within 48 hours, giving reasons. MSMEs now are required to file one annual return for compliance for eight labour laws and 10 central rules. An Ordinance has also been promulgated to simplify levy of penalties for minor offences under the Companies Act, 2013 and in the coming session of the Parliament, the necessary amendment Act would be passed.

 Reaching the Unreached

There are a number of areas where India can still improve its ranking to join top 50 nations. The work is already under progress in these areas and the results would be visible in due course of time. At present, we are at 137 rank in ‘starting a business’, at 166 in ‘registering property’, 163 in ‘enforcing contracts’ and so on. Proactive measures are being taken in these areas. For example, with an objective to have a faster resolution of matters relating to commercial disputes and to create a positive image about the independent and responsive Indian legal system, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act was enacted in 2015 and commercial courts are being established. Even Insolvency and Bankruptcy Code whose effect is captured in ‘Resolving insolvency’ and GST whose effect is captured under paying of taxes etc, are in progress and will affect the ranking positively in the coming years. Some of reform measures like registration of property can only be addressed at the State level and the states are being encouraged by the Centre to do the same.

A concern has been expressed that the rankings capture only the improvements made in the cities of Delhi and Mumbai and ignores the rest of the country; this is a limitation of this ranking. But the Government’s focus is not limited to improving the headline grabbing EoDB ranking.

Effective Delivery of Services

Department of Industrial Policy and Promotion (DIPP) in collaboration with the World Bank launched an annual reform exercise for all States and UTs under the Business Reform Action Plan (BRAP). The aim of this exercise is to improve delivery of various Central Government regulatory functions and services in an efficient and transparent manner. The reform plan under BRAP expanded from 285 to 372 action points in 2017 and further to 405 points in 2018. States and UTs have conducted reforms to ease their regulations and systems in areas such as labour, environmental clearances, single window system, construction permits, contract enforcement, registering property and inspections. The focus on ‘EoDB’ has spawned off a culture where the states are competing with one another in the ease of doing business to attract investment to their states.

Improving Ease of Living

The reforms being undertaken also feeds into the manufacturing sector focus of the Government and is therefore not limited to the parameters that go into determining the EoDB ranking. For example, compliance with labour laws do not figure in the EoDB parameters but the Government has still initiated a number of reforms to encourage the manufacturing sector. Under Ease of Compliance, Government has pruned the number of registers mandatory for all establishments to maintain under 9 Central Acts to just 5 from 56, and the relevant data fields to 144 from 933. Prime Minister has repeatedly said that he is focused on improving the ‘Ease of Living’ of Indian citizens and EoDB forms a small part of it. The larger goal is to create an ecosystem of transparent level playing field so that entrepreneurs have peace of mind and focus on business development instead of managing government department. Such an environment will also promote entrepreneurship.

New labour for new India

Any discussion on the unemployment challenge in India should be grounded in the following facts: One, the Indian economy needs to generate employment for about 5-7 million people that enter the labour force annually; two, over 90 per cent of the workforce has informal employment — they have neither job security nor social security; and three, there has been a growing infomalisation in the organised sector. Informal workers are the most vulnerable section of our society and the trade unions have focused their attention on only protecting the rights of workers in the organised sector.

The Narendra Modi government has tried to address the problems of the informal sector through a focused approach which rests on two legs. The first is to promote formalisation and the second is the provision of social security to those remaining in the informal sector.

The most important reform is the introduction of “fixed term contract” employment. According to the notification introducing it, fixed contract workers must be employed under the same working conditions (such as wages, working hours, allowances and other benefits) as permanent workers. Fixed-term workers are also eligible for all statutory benefits available to a permanent workman proportionately, according to the period of service rendered by him/her. Allowing fixed-term employment would help employers to respond to the fluctuating demand and seasonality in their businesses and facilitate the direct employment of workers.

Formal employment is also sought to be promoted by reducing the compliance cost for companies. Under the Ease of Compliance rules, the government has pruned the number of registers mandatory for all establishments to be maintained under nine central Acts to just five from 56, and the relevant data fields to 144 from 933. The government has also taken numerous technology-enabled transformative initiatives such as the Shram Suvidha Portal, universal account number (UAN) and national career service portal in order to reduce the complexity burden and ensure better accountability. In order to reduce the labour law compliance cost for start-ups, the central government has also managed to persuade state governments and Union Territories (UT) to allow self-certification and regulate inspection under six labour laws wherever applicable.

One of the major achievements of the government is the increased Employees’ Provident Fund (EPF) coverage. The Employees’ Enrolment Campaign (EEC) was launched by the government in January 2017 to enrol employees left out of the EPF and provided incentives to employers in the form of a waiver of administrative charges, nominal damages at the rate of Re 1 per annum and waiver of employees share, if not deducted. In this drive, close to 1.01 crore additional employees were enrolled with EPF Organisation between January to June 2017. The government also launched the Pradhan Mantri Rojgar Protsahan Yojana in 2016 (revised this year) under which the government will pay the full employers’ EPF contribution for three years for new employment.

The construction sector employs the highest number of casual workers outside of agriculture. As a result of the massive campaign and effort by the Union of India, state governments and UTs, the approximate number of building and other construction workers registered as beneficiaries under Building and Other Construction Workers (BOCW) Act up to March 31 has increased to 3.06 crore. The most important reform for this sector is the introduction of Universal Access Number (UAN). If a construction worker migrates from one state to another (which is common), the benefit of registration will not be lost due to the portability of the UAN. The central government also amended the Building and Other Construction Worker Rules, 1998, on December 29, 2017, so as to make the process of filing of the Unified Annual Return transparent for registered establishments.

The amendment of the Payment of Wages Act in 2017 introduced a provision that the government may, by notification in the official gazette, specify that an industrial or other establishment shall pay wages only through its bank account. A notification to this effect with respect to the railways, air transport services, mines and oil field sectors covered under central sphere has been issued on April 25, 2017.

The government is also in the process of finalising Labour Code on Social Security. The Code aims to simplify, rationalise and consolidate the hitherto fragmented laws into one consolidated law, which will be simpler both in terms of comprehension and enforcement. The code has drawn inspiration from the Constitution and follows a rights-based approach.

Historically, due to well-intentioned but poorly-designed labour laws, only a small section of India’s labour force has had job security and social security, while a very large section has had neither. The government has taken a number of steps to change this and the same is being reflected in monthly data released by EPFO, which shows that there is a shift from the unorganised to organised sector, and those remaining in the former will be covered under income and social security schemes.

Road map to affordable medicines

It goes without saying that no government can allow market forces a free hand in the pricing of medicines. Affordability of medicines has to be ensured so that no person in need of it has to suffer. This is especially true in India where a large number of people are still poor. The Narendra Modi government has been focusing on making medicines affordable by making them available through Jan Aushadhi Kendras, enabling price control of essential medicines, promoting prescription of generic medicines by medical practitioners and focussing on a conducive intellectual property regime (IPR).

Generic drugs

Generic drugs tend to cost less than branded ones. These drugs form the largest segment of the Indian pharmaceutical sector. The increasing prevalence of chronic diseases and ever-rising costs of hospitalisation and medicines are responsible for the growth of the generic drugs market. In this context, the National Health Protection Scheme (NHPS), also known as ‘Ayushman Bharat’, launched in 2018 — which seeks to insure 10 crore families for ₹5,00,000 — is expected to exponentially increase the demand for medicines. A well-functioning, end-to-end generic medicine supply chain will keep costs low.

Targeted implementation

An initiative to ensure affordable medicines through dedicated outlets was launched in the form of the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) in 2008. The mission was to create awareness among the public about generic medicines and provide commonly used generic medicines and health-care products. However, as on March 31, 2012, only 157 stores were opened; later, many became non-functional. Till the end of 2014-15, there were 99 stores.

In 2014, the impetus came from the Modi government.A ‘Strategic Action Plan’ was prepared. The product basket now has more than 600 medicines and 154 surgical and consumables in all therapeutic categories. There are over 4,000 Jan Aushadhi Kendras in the country. These centres are gradually becoming ubiquitous and government-procured generic medicines are sold at prices that are between 50% and 90% cheaper than the branded medicines in the open market.

Directive on prescriptions

Due to sustained efforts by the government to put in place a legal framework to promote generic medicines, the Medical Council of India issued a directive in September 2016, making it mandatory — by amending the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 — to prominently mention the generic names of drugs along with brand names in prescriptions. There is an advisory to State drug controllers that all branded drugs, imported or domestically manufactured, should mandatorily have generic names mentioned in bold letters while packaging.

The instrument of price control is also being used to restraint companies from pricing their medicines exorbitantly. ‘Every few years, the Health Ministry, in consultation with experts, draws up a National List of Essential Medicines (NLEM). These medicines, deemed essential for the treatment of common conditions, automatically come under price control. Under NLEM 2015, a total of 376 drugs are under price control. In addition, the government has the power to bring any item of medical necessity under price control — paragraph 19 of the Drugs (Prices Control) Order, 2013. This provision was used to regulate the prices of cardiac stents and knee implants’. There has been an attempt by the government to strike a fine balance between the health interests of consumers and the financial health of Indian pharmaceutical companies.

India has also emerged as the low-cost supplier of medicines to other countries and is the largest provider of generic medicines globally in terms of volume. The Indian pharmaceutical sector industry supplies over 50% per cent of the global demand for various vaccines, 40% of generic demand in the U.S. and 25% of all medicines in the U.K. At present, over 80% of antiretroviral drugs (used globally to combat AIDS) are supplied by Indian pharmaceutical firms.

A serious threat to affordability of medicines comes from big global firms. These pharmaceutical companies and their governments have been trying to lobby with the Indian government to make patent protection more stringent despite the fact that both compulsory licensing and prohibition of evergreening, provided under the Indian Patents Act, 1970, are valid under the TRIPS agreement of the World Trade Organisation. India has resisted any change in its intellectual property laws that can have the effect of making medicines unaffordable.

Pharmaceutical Industry in India- the Sunrise Sector

Indian pharmaceutical sector could be the next IT industry for our economy, both its ability to leverage our skilled manpower and to emerge as a global powerhouse. According to a report, in 2017 the pharmaceutical sector in India was valued at US$ 33 billion and in May 2018, the Indian pharmaceutical market grew at 10.8 per cent year-on-year. The country’s pharmaceutical industry is expected to expand at a CAGR (compound annual growth rate) of 22.4 per cent over 2015–20 to reach US$ 55 billion and is likely to be among the top three pharmaceutical markets by incremental growth and 6th largest market globally in absolute size. India contributes the second largest share of pharmaceutical and biotech workforce in the world.

The row over faulty hip-resurfacing system provided in India by Johnson & Johnson shows shortcomings in the legal and institutional mechanism to deal with quality issues in pharmaceutical industry. This episode has made it abundantly clear that global pharmaceutical companies would continue to treat Indians as second rate patient-customer. The conduct of Central Drugs Standard Control Organisation (CDSCO) in the whole affair also leaves much to be desired. India should use this experience to plug gaps in the legal and institutional framework applicable to the pharmaceutical industry and ramp up the working of the CDCSO. All these will bode well for the domestic pharmaceutical industry and place it on a firmer footing.

Generic drugs form the largest segment of the Indian pharmaceutical sector. A generic drug is a medication created to be the same as an already marketed brand-name drug in dosage form, safety, strength, route of administration, quality, performance characteristics, and intended use. Generic drugs tend to cost less than their brand-name counterparts because generic drug applicants do not have to repeat animal and clinical (human) studies that are required of the brand-name medicines to demonstrate safety and effectiveness. The market for the generic drug has been accelerated by increasing number of patent expiration of branded drugs and government initiatives in all the countries. Increasing prevalence of chronic diseases and ever-rising cost of hospitalization and medicines are responsible for the growth of generic drugs market.

India is the largest provider of generic medicines globally in terms of volume. Indian pharmaceutical sector industry supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno Deficiency Syndrome) are supplied by Indian pharmaceutical firms. Around 40.6 per cent of India’s US$ 16.8 billion pharmaceutical exports in 2016-17 were to the American continent, followed by a 19.7 per cent to Europe, 19.1 per cent to Africa and 18.8 per cent to Asian countries.

Apart from the global demand for Indian pharmaceutical products increase in the size of middle class households coupled with the improvement in medical infrastructure and increase in the penetration of health insurance in the country will also influence in the growth of pharmaceuticals sector. In this context National Health Protection Scheme (NHPS), also known as ‘Aayushman Bharat’ which seeks to provide insurance cover to 10 crore families for an amount of Rs. 5,00,000 is expected to be a watermark for the Indian pharmaceutical industry. A vastly improved access to medical facilities under this scheme to the hitherto excluded population is expected to provide a significant boost to the domestic health service and pharmaceutical industry.

A serious threat to the Indian pharmaceutical industry comes from its global counterparts. The big international pharmaceutical companies and their governments have been trying to lobby with the Indian government to make patent protection more stringent despite the fact that both compulsory licensing and prohibition of ever greening, provided under the Indian Patents Act, 1970, are valid under the TRIPS agreement of the WTO. It should not surprise us that India regularly figures on the ‘Priority Watch List’ of the Office of the United States Trade Representative (USTR) for providing ‘weak’ intellectual property protection. The annual ranking by ‘Global Innovation Policy Centre’ of the US Chamber of Commerce also ranks India poorly for its IPR climate. Any change in Indian IPR law made under foreign pressure will prove to be detrimental to the interest of the domestic companies.

Another threat emerges from manufacturing practices of some of the domestic pharmaceutical companies. As of 2016 there were around 10,000 generic manufacturers in India, of which only 1,400 were WHO GMP (Good Manufacturing Process) –compliant and only 523 of them were US FDA-approved. Now that the Indian companies have captured a significant part of the global generic drug market, it faces a very intense international scrutiny regarding its systems and processes. Any instance of poor manufacturing by one company is likely to attract global attention and affect the brand equity of Indian pharmaceutical industry as a whole. It is time that CDSCO sets higher benchmarks for quality standards for the drug and pharmaceutical industry.

Regulatory complexity is another obstacle faced by the Indian pharmaceutical industry. One of the most commonly cited reason for the growth of Indian Information Technology industry is the lack of governmental interference. While such a scenario is not possible for the pharmaceutical industry considering it literally deals with matters of life and death, the regulatory burden can certainly be reduced. Currently, five ministries of the Government of India are involved in regulating drug and pharmaceutical industry. ‘Price control’ under which the Government fixes the maximum price that can be charged for a medicine also needs to strike a fine balance between the health interests of the consumers and the financial health of Indian pharmaceutical companies.

The bulk import of cheaper Active Pharmaceutical Ingredients (API) from China has led to an evisceration of the Indian manufacturing capacity in the sector. In order to ensure the long term health and independence of the Indian pharmaceutical industry, it is required that instances of dumping of API from China are quickly identified and remedial measures taken. It is equally important that issues that hobble Indian manufacturing are removed.

Gopal Krishna Agarwal

National Spokesperson of BJP on Economic Affairs

Member Board of Governors Indian Institute of Corporate Affairs (IICA)

gopalagarwal@hotmail.com