By Kaustubh Kulkarni

MUMBAI (Reuters) - The increased weighted deduction of up to 200 percent on in-house research and development (R&D) expenses and the unchanged 4 percent excise duty on formulations are positives for pharma industry, officials and analysts said.

However, the hike in minimum alternate tax (MAT) from 15 percent to 18 percent and input duty on raw materials from 8 percent to 10 percent would neutralise the monetary impact, officials and analysts observed.

The industry was expecting added sops on R&D activities in the budget and the same is expected to boost investments in the R&D sector, both by Indian and multi-national companies, analysts and officials observed.

"The 200 percent weighted deduction on R&D expenses will boost investments in R&D sector," Alok Saxena, director-international business, Elder Pharmaceuticals Ltd told Reuters over phone.

"Firms like Ranbaxy, Glenmark and Sun Pharma invest heavily in R&D and they can reduce tax liability from this announcement," observed an analyst with JM Financial Ltd.

"Ranbaxy and Sun Pharma spend up to 5 billion rupees and 3.5 billion rupees on R&D. Hence, they will have a big advantage. The move will improve R&D infrastructure in the country," another sector analyst observed.

According to the analyst, Indian pharma companies as of now spend about 4-7 percent of their total revenues on R&D activities.

The government had halved excise duty on formulations to 4 percent from 8 percent as part of the three-step fiscal stimulus package announced starting December 2008.