Madras HC directs to constitute committee to diminish reliance on China for API imports

"This dependency handicaps us in responding effectively to security and other breaches by the neighbor. It also makes our patients more often contend with spurious and substandard drugs and placing them in a vulnerable prospect of going without medicines if tensions escalate between the two countries, especially after the Galwan Valley tussle," the court said.

According to the court, the economic advantage of importing APIs has led India to lose its scientific edge and self-reliance in APIs and India now thrives as a mere Finished Dosage Hub, that is, a country that imports its API requirements and bundles them into finished dosages.

At one stage, even the National Security Advisor (NSA) had cautioned the government on the national security dangers on account of this excess import dependence on a single nation, the court said.

The High Court observations came while it ordered to set up a five-member committee to ensure that the twin goals of enabling a private company Vinkem Labs Ltd to become a global player to earn foreign exchange for the country and also ensure self-reliance of India in cancer drugs.

In its order dated September 30, the court said that a committee shall be constituted, comprising one member each from the Ministries of Pharmaceuticals and Finance not below Joint Secretary-rank; Secretary, Department of Pharmaceuticals, Government of Tamil Nadu; one member from Bank of India and National Bank for Agriculture and Rural Development (NABARD) not below the rank of Senior General Manager; and NL Rajah, the amicus curiae appointed by the court.

The court ordered the formation of the committee within eight weeks from the date of issuance of a copy of this order.

According to the order, the proposed committee would facilitate necessary requirements of Vinkem Labs, including fiscal and regulatory for research and development (R&D), commercialization, industry development, regulatory compliances, technology infusion, exports, domestic supply, and others.

The court also said the committee would consider requests by Vinkem Labs and through its members, who are representatives of the governments concerned, make recommendations to the government and other statutory authorities for necessary sanctions, subsidy, interest concession, tax concession, licenses, compliance form filings, exemptions, extensions, enhancements, escalations and other benefits for it.

The court-monitored committee should also tackle delays and difficulties, including with regard to funding requirements of Vinkem Labs, with necessary recommendations to the banks.

Citing the recommendations of the Dr VM Katoch Committee for API industries, the court said that the benefits of interest subvention, debt ratio, moratorium, and other concessions ought to be applied to Vinkem Labs to revive and fructify its project.

The court also directed the central government to advise/direct the Bank of India and NABARD to release loan sanction to the petitioner for USFDA approval with a requisite moratorium for the period of USFDA approval and sale in the US; waive conditions of margin, capital contribution, additional security, FITL interest or other repayments during project implementation or other upfront funds from the petitioner as a pre-condition; apply interest subvention in the loan account to 7.5 percent per annum from the time of advance; apply simple interest with the waiver of penal and compound interest from the date of non-performing asset (NPA); sanction requisite enhancements, and release timely disbursement to the petitioner.

The court also directed the Bank of India and NABARD to process the loan application of Vinkem Labs and start disbursements within three weeks as the direction from the central government will follow in due course.

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