The credit shortage is making it difficult for India's pharmaceutical exporters to obtain the letters of credit (L/Cs) they need to sustain one of the country's most buoyant industries.

Pharmexcil, the government agency that represents the industry, now says a multi-million dollar state rescue package is on the cards for the pharmaceutical sector.

Insufficient credit

Pharmaceutical exporters have been hit by the worldwide credit crunch as they struggle to finance raw material imports as well as exports.

"Credit availability has been a major problem for exporters as foreign exchange is not available for roll over of letters of credit," executive director of Pharmexcil, P V Appaji, told India's Economic Times.

Import pressures

To make matters worse in terms of the price of raw materials, the rupee has depreciated by 25 per cent against the US dollar since April.

Pharmexcil says it is seeking more credit for exporters under a scheme in which customs duty paid on imported goods is offset against exported goods.

Pharmexcil's prescription

The agency says it is also lobbying government to restore a 25-day grace period with the Foreign Exchange Dealers' Association of India and price hikes authorised by the National Pharmaceutical Pricing Authority.

India's pharmaceutical industry employs more than three million people. Indian suppliers account for 8 per cent of global production and supply two per cent of the world market.

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