Sri Lanka has invited Indian pharmaceutical companies to set up operations in the country by offering them space in its special economic zones, a prospect that has raised concern for domestic manufacturers.
The Sri Lankan government could also offer sops to Indian firms which invest to expand the production of formulations and bulk drugs there.
Indian government officials said this will lead to expansion of the industry footprint in Sri Lanka. "The Sri Lankan government wants to encourage overseas investment by pharma companies because most countries now want domestic production and reduce dependence on imports," said an official privy to the details.
Though Sri Lanka had first floated this idea in 2012, the proposal did not move forward then but could take shape this time as the Sri Lankan trade minister is on a two day visit here India exported pharmaceuticals worth $205 million in 2015-16 to Sri Lanka.
"Sri Lanka can be a good base for exports also because they can manufacture a part of the product here and part there. There are similar opportunities for pharma in Bangladesh," said P V Appaji, director general of Pharmexil.
Some trade experts said that this move could dent India's efforts of promoting Make in India especially because the country itself has high dependence on China for active pharmaceutical ingredients (API) or bulk drugs. "We should get our act together for strengthening domestic API production before considering these kinds of project exports. The situation on bulk drugs is grave because of dependence on China and we should think of project exports to Sri Lanka only later," said Biswajit Dhar, professor at JNU.
India imported APIs worth $3.9 billion in 2014-15, of which drugs worth $3.3 billion came from China, and has begun the process of establishing bulk drug manufacturing parks in the country to reduce this dependence.
Another expert said that setting up manufacturing base in Sri Lanka will hurt India's exports as some units might relocate there due to better incentives. "This goes against Make in India as it promotes capital flight. Even if we export from Sri Lanka, we will lose precious foreign exchange," he said, requesting not to be identified.
The concern stems from the fact that India has lost substantial garment making business to neighbouring countries.
The Sri Lankan government could also offer sops to Indian firms which invest to expand the production of formulations and bulk drugs there.
Indian government officials said this will lead to expansion of the industry footprint in Sri Lanka. "The Sri Lankan government wants to encourage overseas investment by pharma companies because most countries now want domestic production and reduce dependence on imports," said an official privy to the details.
Though Sri Lanka had first floated this idea in 2012, the proposal did not move forward then but could take shape this time as the Sri Lankan trade minister is on a two day visit here India exported pharmaceuticals worth $205 million in 2015-16 to Sri Lanka.
"Sri Lanka can be a good base for exports also because they can manufacture a part of the product here and part there. There are similar opportunities for pharma in Bangladesh," said P V Appaji, director general of Pharmexil.
Some trade experts said that this move could dent India's efforts of promoting Make in India especially because the country itself has high dependence on China for active pharmaceutical ingredients (API) or bulk drugs. "We should get our act together for strengthening domestic API production before considering these kinds of project exports. The situation on bulk drugs is grave because of dependence on China and we should think of project exports to Sri Lanka only later," said Biswajit Dhar, professor at JNU.
India imported APIs worth $3.9 billion in 2014-15, of which drugs worth $3.3 billion came from China, and has begun the process of establishing bulk drug manufacturing parks in the country to reduce this dependence.
Another expert said that setting up manufacturing base in Sri Lanka will hurt India's exports as some units might relocate there due to better incentives. "This goes against Make in India as it promotes capital flight. Even if we export from Sri Lanka, we will lose precious foreign exchange," he said, requesting not to be identified.
The concern stems from the fact that India has lost substantial garment making business to neighbouring countries.
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