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India has emerged as a key supplier of generic and affordable medicine. Yet, a few deterrents on the land side hang up smooth flow of operations at ports. Jayant Tagore, President of The Bulk Drugs Manufacturers Association of India outlines the key challenges pharma companies face while importing raw materials from other countries.
Q How would you categorise the challenges faced by importers of active pharmaceutical ingredients and drug intermediaries?
The delays we face in clearing both imports and exports at the customs end affects our operations. Most times, the customs interface ICEGATE that oversees filing of documentation fails and importers are unable to file the Bill of Entry and other documents. A delay at this juncture has a cascading effect on other procedures as well.
Q Why do most imports come through Chennai and Nhava Sheva alone? Is it a force of habit or inadequacy of facilities that results in this restricted choice?
Yes, the trade does need to change its mindset. Despite congestion and port side delays at Chennai and JNPT, the trade still prefers JNPT because it is resistant to change. Our importers need to be sensitised on facilities available at ports like Krishnapatnam and Visakhaptnam where vessel calls frequently, there is an Assistant Drug Controller stationed and there is customs clearance 24/7. There is no reason for industries based in Andhra Pradesh, Telangana and Orissa to go to JNPT for their imports.
Q What processes can be quickened to benefit from time and cost savings?
The challenge is mostly to do with throughput time when we import and export our products. The time taken to get containers on and off the vessel needs to be shortened so we can save on our inventory costs. Typically, we factor in three months from the time of opening the Letter of Credit to the time the material is received at our warehouse. While it takes two weeks to ship our raw material from China, it takes a whole week for it to come from Chennai to our warehouse in Hyderabad.
Q How would you want Indian ports to re-model their functioning?
We want cheaper, faster alternatives to JNPT and Chennai. The ports and forwarders to bring our imports to our warehouse and deliver it after having destuffed and cleared customs at the earliest possible date from the time they are off loaded. We are looking at a time saving of two weeks to expect the least. Currently, it takes a week for all the procedures to be completed once the container is offloaded from the vessel. Any delay has repercussions on the cost. Just destuffing a container and loading them on to trucks costs us a lakh per box.
Q What changes would have to be made with GST kicking in from 01 July?
So far, a lot of our exports have been kept in abeyance because we didn’t know in what format to raise an invoice. So, up to 10 July we did not export a single consignment. This is because we did not know whether the valuation is on FOB or CIF value. We hope these clarifications will be made by the customs and the government in the next couple of weeks and our documentation will not be troublesome. Also, with this unified tax regime, we have to see how the exporters can import raw material without paying duty. I still reckon exporters will have to pay duty, manufacture the product and then claim a refund during the time of exports.
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