PEP PILL

New Delhi, Jan. 28: Exports of pharmaceutical products to China could reach $30 billion by 2009 if non-tariff barriers are removed to permit market access, India Inc said.

A study by the Federation of Indian Chambers of Commerce and Industry (Ficci) said that in view of the existing procedural and legal obstructions, industry has sought to streamline customs norms and wants efficient use of technology for electronic data interface in customs administration and information exchanges.

India Inc has suggested a bilateral pre-shipment inspection agreement with China. It is also keen on easier trade financing and greater cooperation between the exim banks of the two countries, which would work to the benefit of trade.

Indian exports of drugs, pharmaceuticals and fine chemicals to the US, Europe, Africa and South America have grown by 19 per cent in the last three years, while the global average growth rate for this sector is about 6 per cent.

On the other hand, India’s exports to China have grown just 3 per cent in the last three years. From $94 million in 2002-03, it has grown to $106 million in 2003-04 and $109 million in 2004-05.

“This accounts for barely 2-3 per cent of Indian exports of drugs and pharmaceuticals to the world. This indicates that the high-performing Indian pharma sector has not found the environment conducive to achieve similar growth with China,” said the Ficci study.

Some of the non-tariff barriers identified include long customs procedures, re-inspections and discriminatory packaging and labelling regulations that even specify the colour used for packaging, resulting in delays and higher costs.

The banking procedures for foreign players, particularly for remittance of foreign exchange, are tough and tedious, the study says.

“Even the sight payments are remitted after a minimum of 30 to 45 days due to the foreign exchange declaration system of Chinese banks,” said the pharma industry.

Intellectual property (IP) rights act as another restrictive non-tariff trade barrier. China surpassed the US as the world’s most litigious country for IP disputes in 2005, with 13,424 cases filed with Chinese courts compared with 10,905 cases in the US during the same period.