Thursday, January 26, 2006 08:00 IST Joe C Mathew, New Delhi
The sweeping changes happening in the tax rationalization front and the government decision to enforce Maximum Retail Price (MRP) inclusive of taxes from mid-2006 are likely to take the wind out of the sails of Bhagirath Place, one of the biggest markets for drugs in Asia. The decline in the prospects of the most happening medicine trade hub of the national capital territory of Delhi is also accelerated by alleged reports of spurious drug circulation, though proved a mostly baseless accusation during recent times. Bhagirath Place, the biggest wholesale market for drugs in the country, especially for North India, may soon cease to be so.
With about 200 counters with an average sale of Rs 5 lakh a day, it is crores of rupees worth business that is taking place in Bhagirath Place everyday. It was much bigger, until the state of Haryana introduced Value Added Tax (VAT) system last year, traders say. According to them, the introduction of VAT resulted in the inter-state trade of drugs non profitable. "All Haryana based drug retailers who used to source medicines from us stopped coming to us. The same situation is to happen once Uttar Pradesh also moves into VAT regime" they fear. With the Uttar Pradesh government already deciding to join the VAT bandwagon from April 1, 2006 onwards this fear is not totally unfounded. Alongside VAT is the government decision to bring in uniform price structure for medicines across the country during the current year. The absence of tax variation would prove inter-state drug trade useless and Bhagirath Place will sooner or later be confined to serve the demand of the state of Delhi alone. The unique positioning of Delhi as a transit point for drugs manufactured in the states of Haryana, Uttar Pradesh and Punjab and the presence of Bhagirath Place as a major trading hub was the reason of the flow of such a huge quantity of medicines into the city. The drugs move to the entire northern states and also to other parts of the country and abroad from Delhi. This predominance of trade activity has also given rise to complaints of Delhi being one of the main centres of spurious / counterfeit drugs trade in the country. While there are occasional media reports of raids being conducted and haul of spurious drugs in Delhi and neighbouring areas, officially, there has been no instance of spurious drug presence in the city during the last two years. Even when there were some instances of spurious / counterfeit drug presence, it was mostly counterfeit and sub-standard cases, that too a miniscule percentage of 0.1. The seizures, claimed to be spurious drugs have often found to be original drugs and the economic offence of tax evasion being the only unlawful activity carried out there.
Meanwhile, the state drugs control department has mobilized its limited resources to ensure that Bhagirath Place is no longer looked at with suspicion. The department has taken the lead to group the traders under the umbrella of local associations and helped them understand the importance of good storage practices. Routine interaction with the traders' associations has helped the department to bring about a healthy change in the functioning of the business here.