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Defer ABS payment, or pay it only under protest: ADMA advisory to members

Nandita Vijay, Bengaluru
Tuesday, August 18, 2015, 08:00 Hrs  [IST]

The Ayurveda Drug Manufacturers Association (ADMA), which sought legal opinion from three different law firms, has been advised that while the Biodiversity Act is applicable to all companies, the clause on access and benefit sharing (ABS) fees is relevant only to non-Indian companies.

Based on this, the ADMA has circulated an advisory to its members suggesting to defer the ABS payment, if possible. If not, pay it only under protest, Dr. Amit Agarwal, vice president, South, ADMA and director Natural Remedies told Pharmabiz.

India chose to be a pioneer globally to implement ABS. But its herbal industry is bogged down by issues on adhering to the guidelines when it comes to its international customers because USA and China are not signatories to the Nagoya protocol which is an international agreement on ABS, he added.

Out of 196 countries, 168 are signatories to the Convention on Biodiversity (CBD) and 59 of them have signed the Nagoya protocol. Compared to India, European Union, Brazil and South Africa have seemingly made considerable progress in its implementation as they have enacted pragmatic regulations. Unfortunately, there are more questions than answers and nobody available to guide the Indian herbal industry, he said.

Currently in India, many states which are home to the herbal industry, received notices from their respective State Biodiversity Boards (SBBs) to submit Form 1 to pay ABS. These notices mention submission deadline. In some states, the industry paid ABS out of fear, but under protest. The domestic companies are unclear on whether ABS is applicable or not. This is despite clarifications sought by ADMA, AMAM and AMMOI from National Biodiversity Authority (NBA) and ministry of environment, forests & climate change which failed to respond. In many north Indian states, herbal manufacturers are unaware about the Act or the ABS obligation, stated Dr. Amit.

Apart  from ABS applicability, there are several grey areas in the procedures and SBBs continue to provide different  answers to industry which is seeking clarifications on fundamental issues.

For instance, the biggest confusion is about Section 7 of the Act which mandates a ‘citizen resident in India’ to only give prior intimation to the Board on access of biological resources for commercial utilisation. The recent rules published via G.S.R. 827 on November 21, 2014 framed under section 18(1) and 21(4) of BDA, 2002 covers only activities under sections 3, 4, 5, and 6. But domestic manufacturers come under section 7. The law firms informed ADMA that these new regulations did not  apply to purely Indian companies as these sections are applicable only to non-Indian entities. This aspect gets reinforced as section 32 describes the constitution of State Biodiversity Fund. There are only 3 sources of revenue specified in this section and none refer to ABS fees. Under section 21, subsection (2) mentions NBA charging ABS, which is applicable only to non-Indian companies according to 3(2) of the Act, he said.

Purely Indian companies are required to approach SBBs only. Further, Sections 23 and 24 describe the functions of SBB which does not specify that they are empowered to impose benefit sharing to purely Indian companies. In the absence of  any written response from the authorities, ADMA was forced to interpret the regulation in the way it has done.

The law firms have also questioned the legal tenability of regulations 2014 as they are completely ultra vires to the Act. This Act was primarily designed to conserve Indian bio-resources, promote sustainable use and facilitate equitable benefit sharing. However, as of now, the Act is being used as a new tool for tax or fees collection, pointed out Dr. Amit.


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