Budget 2013: OPPI wants weighted deduction on outsourcing of manufacturing activity

NEW DELHI: Organisation of Pharmaceutical Producers of India (OPPI) in its budget 2013 wish-list has sought a specific provision for weighted deduction on R&D expenditure even where a part or whole of manufacturing activity is outsourced by the company.


Currently, there is lack of clarity on whether weighted deduction for R&D expenditure is allowed to companies where a part or entire manufacturing activity is outsourced to another company.

"In some cases, it may be economically feasible to outsource a part of manufacturing activity to outside units. However, in such case the companies may not qualify for weighted deduction on R&D expenditure," says OPPI.

OPPI feels that since R&D is a high investment and high risk business, it may be economically feasible to outsource a part of the manufacturing activity to outside units. Hence there is a case for weighted deduction on R&D expenditure.