The extent of this migration is magnified by the fact that over 50 per cent of all the pharmaceutical companies that have shifted to HP are from Gujarat.
Clearly, pharmaceutical companies see a huge cost advantage in shifting base to HP, where there is a tax holiday till March 2007. In contrast, only Kutch in Gujarat offers tax holiday. But the too will end on December 31, 2005.
HP is becoming a hub for pharmaceuticals manufacturing companies, with over 300 pharma firms setting up units there.
Pharmaceuticals companies waiting in the wings to set up units in HP includes majors such as Ranbaxy, Cipla, Dr Reddy's, Nicolos Piramal and Dabur, among others.
Even the Gujarat-based Alembic, Zydus Cadila, Cadila Pharmaceuticals, Intas Pharmaceuticals, Torrent Pharmaceuticals and Paras Pharmaceuticals are also planing to set up units in HP.
"Himachal Predesh is emerging as the pharmaceutical manufacturing hub of the country. Almost all the leading pharma majors has set up their units in our state or is in process of setting of units. Most of the pharma companies setting up unit in our state are from Gujarat." Vibhadra Singh, chief minister of Himachal Pradesh told Business Standard on Monday.
The pharma majors' are moving into HP to cash in on the special incentive package announced by the Centre, which include income tax holiday and excise duty concessions for specified periods, and investment subsidy on plant and machinery.
Central transport subsidy is already being provided for five years to the industrial units. Singh said that giving tax holidays is not to make other states uncompetitive. "We are not forcing these companies to set up shops in our state, we are just inviting them because of our competitive advantage."
The central government incentive package has been supplemented by the state government's special package announced in the state's industrial policy.
"We are sure no other states provide these facilities, which HP does and these packages are effective enough to help create congenial investment climate in our state and attractive enough in motivating the companies to invest in HP," said Singh.