Pharmexcil wants data from drug exporters over unpaid, delayed payments from foreign buyers
Exporters have been asked to share buyer details—including name, country, invoice value, payment terms, and nature of default, according to a Pharmexcil document reviewed by Mint. The deadline for submitting the information is 10 October.
The Pharmaceuticals Export Promotion Council of India (Pharmexcil), a trade promotion agency set up by the commerce ministry, has sought information from Indian pharma exporters on payment defaults by foreign buyers.
India, the world's generic drugs capital, exports nearly $28 billion worth of medicines a year making up 20% of the global volume. Around 4,000 drug makers are members of Pharmexcil.
Exporters have been asked to provide details such as the buyer’s name, country, contact information, invoice value and date, payment terms, and nature of default, according to a Pharmexcil document reviewed by Mint. The deadline for submitting the information is 10 October.
Delayed payments or non-receipt of overseas dues "not only disrupt cash flows but also pose significant hurdles to seamless export operations," the document stated.
New SOP in works
The information will be used to develop a new standard operating procedure (SOP) to help Pharmexcil members deal with delayed and unpaid dues and censure such defaulters. Members have been assured of data confidentiality.
The new SOP is being developed in collaboration with India’s foreign missions, Export Credit Guarantee Corporation of India (ECGC) and Directorate General of Foreign Trade (DGFT). The SOP will “enhance the council's ability to intervene constructively," per the Pharmexcil document.
Generally, pharma exports work on a 50% upfront payment with the remaining paid on shipment, said Namit Joshi, chairman of Pramexcil. But with increased competition, some exporters have started offering credit to buyers, especially in long-standing relationships, through letters of credit (LC).
This is where risks turn into problems. “The buyers get the goods released into the market and sell them; if they wish to continue the business, they ask the bank to release the payment," said Joshi, who is the chairman of Centrient Pharmaceuticals India. At times, the buyer doesn't do so under some excuse and the payment gets delayed or remains unpaid. The cases are largely seen among African and Latin American buyers.
"In this new system, both the buyer and the seller will be held accountable," Joshi added.
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