New Sales Tax Could Cut Indian Drug Prices

A number of local companies have claimed that India's new Value Added Tax sales tariff, to be introduced on April 1, will benefit market conditions across the economy, including the pharmaceuticals sector.

Local representatives of multinational consumer goods companies have stated that the new tax will remove burdensome tariffs on many products, and could boost revenues as the government is expected to set sales taxes on medicines at a lower rate than previously.

Local and multinational drugmakers are likely to welcome this development, as price pressures in the Indian drug market have accelerated recently. However, the new tax framework does not amount to any real adjustment in the government's harsh retail price controls on leading drug products.