India Today - - UPFRONT -

Yes­ter­day once more,” the old clas­sic song of the seven­ties by The Car­pen­ters, seems to best de­scribe the sit­u­a­tion in In­dia to­day. Be­lieve it or not, do­ing busi­ness in In­dia now seems to be more chal­leng­ing than it was when I started Bio­con in 1978.

We may be free from the shack­les of Li­cence Raj of the past, but the In­dian econ­omy to­day is crip­pled due to over­reg­u­la­tion and lack of an en­abling busi­ness en­vi­ron­ment. Busi­nesses to­day are mired with nu­mer­ous ap­proval pro­cesses from mul­ti­ple au­thor­i­ties. In­con­sis­tency and ad ho­cism in pol­icy- mak­ing due to knee- jerk re­ac­tions of the Govern­ment to ac­tivism cou­pled with its fail­ure to pro­vide an ap­pro­pri­ate in­fras­truc­tural sup­port, have pushed the in­vest­ment sen­ti­ment in In­dia to an all- time low.

Till re­cently, In­dia was be­ing hailed as one of the hottest in­vest­ment des­ti­na­tions in the world, along with China and Brazil and a few other coun­tries. To­day, In­dia is ranked at No. 60 in the re­cent Global Com­pet­i­tive­ness In­dex 2013- 14 put out by the World Eco­nomic Fo­rum. Brazil is ahead at No. 56 and China has climbed up to No. 29.

The biotech in­dus­try, like many oth­ers, is be­ing ham­strung by the Govern­ment’s fail­ure to pro­vide un­in­ter­rupted power, ad­e­quate potable wa­ter, ef­fec­tive ef­flu­ent treat­ment fa­cil­i­ties and well- con­nected roads. Added to these are in­or­di­nate de­lays in ob­tain­ing en­vi­ron­men­tal and other clear­ances. With the cost of do­ing busi­ness in In­dia is ris­ing, it’s not sur­pris­ing then that both lo­cal and over­seas busi­nesses are mov­ing to for­eign shores that are more in­vestor- friendly.

Bio­con is set­ting up Asia’s largest in­te­grated in­sulins pro­duc­tion plant at Bio- XCell, a biotech­nol­ogy park be­ing pro­moted by the Malaysian govern­ment at Jo­hor, Malaysia. Work on this fa­cil­ity, which started in Jan­uary 2012, is pro­gress­ing well and it is ex­pected to be fully op­er­a­tional by 2015. Malaysia of­fered us tremen­dous ad­van­tages in terms of high- end in­fra­struc­ture and ameni­ties, apart from at­trac­tive tax con­ces­sions, which is why we opted to ex­pand our man­u­fac­tur­ing ca­pac­ity there. If In­dia had a match­ing ecosys­tem for the biotech in­dus­try, we may not have looked else­where.

A com­plete lack of po­lit­i­cal will in im­ple­ment­ing bold eco­nomic re­forms, cre­at­ing world- class in­fra­struc­ture, ush­er­ing in over­due labour and land re­forms, ad­dress­ing power woes and rolling back unfriendly busi­ness reg­u­la­tions is re­spon­si­ble for a flight of cap­i­tal which is push­ing In­dia deeper into an eco­nomic quag­mire. In­dia’s GDP growth in FY13 was 5 per cent, the slow­est an­nual rate in a decade. Things don’t seem to be get- ting any bet­ter. GDP growth was a mere 4.4 per cent in the first quar­ter of FY14. The ru­pee hit a record low of 68.85 per dol­lar in Au­gust, mak­ing it the worst per­form­ing cur­rency in Asia. For­tu­nately, it has re­cov­ered some­what now.

The need of the hour is sweep­ing pol­icy changes be­cause in­cre­men­tal mea­sures will not calm the eco­nomic panic.

The Govern­ment not only needs to re­store in­vestor con­fi­dence by ar­tic­u­lat­ing en­abling poli­cies but also has to de­velop the right sup­port­ing in­fra­struc­ture for in­dus­tries. The five crit­i­cal steps the Govern­ment needs to take to re­vive in­vestor sen­ti­ment in the pharma/ biotech sec­tor are:

The long- drawn con­tro­versy over al­low­ing FDI in ex­ist­ing pharma projects has deep­ened con­cerns among for­eign in­vestors over In­dia’s un­pre­dictable in­vest­ment cli­mate. The FIPB should clear all pend­ing in­vest­ment pro­pos­als in the sec­tor to cre­ate an en­abling en­vi­ron­ment for in­vest­ments.

If the Govern­ment is de­sirous of en­abling the In­dian pharma/ biotech in­dus­try to tide over this dif­fi­cult eco­nomic en­vi­ron­ment, it must roll out greater in­cen­tives to ex­porters to off­set im­port costs at a time when the ru­pee is weak. Fur­ther­more, im­ports of fin­ished drug prod­ucts must be dis­cour­aged through ad­di­tional du­ties and in­dige­nously pro­duced drugs favoured in govern­ment ten­ders.

To boost in­vest­ment, the Govern­ment should also in­cen­tivise R& D in biotech­nol­ogy by pro­vid­ing a 10- year tax hol­i­day on prod­ucts de­vel­oped in­dige­nously, pro­vide tax breaks for ven­ture fund­ing, al­low zero duty on R& D equip­ment, and al­low a longer sun­set date for biotech SEZs.

The Govern­ment must en­sure that the for­mat, con­tent and in­ter­pre­ta­tion of all reg­u­la­tions is com­mon through­out the coun­try and in­tro­duce a ‘ sin­gle win­dow’ sys­tem for se­cur­ing all clear­ances and ap­provals from the var­i­ous Cen­tral and state agen­cies.

The Govern­ment should soon pass the Biotech­nol­ogy Reg­u­la­tory Au­thor­ity of In­dia Bill which will en­sure har­mon­i­sa­tion of many reg­u­la­tions across In­dia and pro­vide a sin­gle win­dow ap­proval sys­tem.

The cre­ation of life sciences/ biotech clus­ters will at­tract en­trepreneurs to set up their busi­nesses as well as bring to­gether an­cil­lary com­pa­nies. The clus­ter ef­fect and the en­abling pol­icy en­vi­ron­ment will en­cour­age biotech play­ers to col­lab­o­rate and net­work, thus cre­at­ing a healthy sym­bi­otic en­vi­ron­ment that ben­e­fits all. It’s high time the Govern­ment got its act to­gether to ar­rest In­dia’s eco­nomic slide, and took im­me­di­ate ac­tion to jump- start the econ­omy.

Www. in­di­a­to­day­im­ages. com

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