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The Association of Indian Medical Device Industry (AiMeD) has sought the Union finance ministry to withdraw the concessional duty notification that reduced the duty on medical devices imports to 0-7.5 per cent and impose 5-15 per cent duty on imports of medical devices.
In a pre-budget memorandum submitted to finance minister Nirmala Sitharaman, the Association also sought the government to monitor the maximum retail price of imported medical devices against import landed cost.
In its pre-budget memorandum to the finance ministry, AiMeD has highlighted that reduction of import duty on devices is an effort of the government that is going in vain since the consumers/patients are paying 10-30 times of the import landed price of the devices.
"There is no gain to the consumers from NIL duty as affordability is linked to MRP labelled on product as that is what has been charged to them. Thus, the device manufacturers have asked for withdrawal of Concessional Duty Notification that reduces duty to 0-7.5% and seek 5% - 15% duty on imports of medical devices," it said.
“As assured by you in your earlier Budget speech there is a need to remove NIL Duty Exemption notifications (and we recommend even Concessional Duty Exemption notification that reduces duty to 7.5%) which have made it non-viable to manufacture and motivated many manufacturers to become importing traders or pseudo manufacturers,” said Rajiv Nath, forum coordinator, AiMeD in a letter to the finance minister Nirmala Sitharaman.
"The current Basic Import Tariff of 0-7.5% is required to be hiked to 5% - 15% for medical devices and on their components to be at least 5%. The tariff for components needs to be 7.5% for the next two years as a PMP Make in India Enabler. Concessional Duty on raw material (including packaging materials of sterile disposables) may be retained at 2.5% for now, for next three years," he added.
The current duty structure is also incongruent to the “Make in India” approach of the government. Nominal tariff protection is needed for medical devices that are being manufactured in India as a predictable tariff policy so if capacity is added by a domestic manufacturer, there’s assured nominal protection.
To promote domestic medical device industry that will also enable exports and subsequently reduce India's heavy reliance on imports, the current basic import tariff of 0-7.5% is not enough. The imports are consistently above Rs. 61,000 crore for the past three consecutive years and even jumped 13% in the last fiscal (2023-2024) to reach Rs. 69,000 crore, AiMeD said.
Indian manufactures have the ability to cater to 1.4 billion people, and can have enough domestic production but sadly there is 70% import dependence in the field of medical devices. This dependence can be completely avoided if there is some reasonable protection for the domestic industry as provided for the mobile phone industry.
The current scenario is against Indian manufacturers in every way, said AiMeD. After GST, imported devices became cheaper by 11% and the Indian manufacturers have been challenged to compete with foreign imports in government tenders.
Indian manufacturers are forced to become importers as it is cheaper and more convenient to import. Importers avail GST input credit which they were not availing in the pre-GST period. There is 6% Countervailing Duty and 4% Special Additional Duty now, while no such credit was earlier available to a trader.
Department of Pharmaceuticals has stated that indigenous manufacturers have a disability of 12-15% on account of various factors like lack of adequate infrastructure, high cost of finance, inadequate availability of power, limited design capabilities, low focus on R&D and skill development, etc and have supported AiMeD request to finance ministry for recall of NIL/Concessional Duty Notification for the Medical Devices that are being made in India and where adequate capacity exists.
There is no mechanism to address these disabilities in the manufacturing of medical devices in India as compared to other major economies. The Department of Biotechnology, NITI Aayog and the office of Principal Scientific Advisor to the Prime Minister have been working to create an ecosystem for nurturing startups and incubators.
But once they create a commercial product and have to graduate to MSME entrepreneurs, the real challenge comes for these startups to survive and cope with the 12-15% disabilities as well as being stonewalled by buyers who do not seek lower costs but seek higher MRP based trade margin chargeable to their patients/clients.
AiMeD has requested the government to take care of these factors and protect ethical manufacturers and importers to help India achieve medical security and provide employment to a larger section of the population, said the Association in a press release.
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