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 The All India Organisation of Chemists & Druggists (AIOCD), representing over 12.5 lakh chemists and distributors nationwide, has urged Union finance minister Nirmala Sitharaman for immediate action to protect small retailers from significant financial losses stemming from the recent GST 2.0 rate reductions.
While acknowledging the benefits to consumers, the organization warns that the reform's transition period is unfairly impacting the survival of small drug traders across the country. The core of the issue lies with existing inventory purchased at higher tax rates, which now must be sold at lower prices due to the reduction in GST rates (18% to 5%, 12% to 0%, and 12% to 5%).
AIOCD president J S Shinde and general secretary Rajiv Singhal emphasized that because medicine margins are strictly regulated by the National Pharmaceutical Pricing Authority (NPPA), these small traders cannot absorb the tax difference and are facing unavoidable financial hits.
A significant portion of these affected retailers are either unregistered under GST or operate as composite dealers, meaning they are unable to claim Input Tax Credit (ITC) to offset their losses. This puts them in a total loss situation where they are compelled to sell stock at a reduced price, despite having already paid the higher tax to the government on the purchased goods. This situation is particularly critical for chemists in rural and semi-urban areas already operating on very thin margins.
The AIOCD expressed distress over the current narrative, noting that while government officials and political leaders are actively highlighting how consumers have benefited from the GST relief, the plight of these small retailers is being completely overlooked. The organization argues that it is unjust and unsustainable to force these small businesses, the backbone of India’s retail drug trade, to bear the entire cost of this historic transition.
To safeguard these vulnerable small traders and prevent mass shop closures, the AIOCD has put forth two primary requests. Firstly, they have urged the government to allow the sale of pipeline medicine stock at the old Maximum Retail Price (MRP) for a transitional period of three months. This would permit the existing, high-tax inventory to be exhausted without incurring further losses.
Alternatively, the memorandum requests the announcement of a special relief mechanism or package to financially offset the unavoidable hit taken by these small traders and chemists. Furthermore, the AIOCD has called for a period during which no harassment or penal action is taken against small retailers during this difficult transition, recognizing the ground-level difficulties.
The national trade body has issued a stern warning, without swift and urgent relief, many small chemists may be forced to shut down. This, they caution, will inevitably lead to a serious disruption in the availability of essential medicines, especially in remote and rural areas, ultimately making the government responsible for maintaining last-mile access to healthcare supplies.
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