Domestic medical device makers raise pitch for duty hikes on imports

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Domestic medical device makers are calling for higher import duties, preferential market access and capping of trade margins to help local companies to take on foreign ones. Association of Indian Medical Device Industry (AiMeD), the domestic industry lobby that claims to have around 300 members, has written to the government seeking 15 percent duty on imports of devices. For products not made in India, AiMeD has called for 5 custom duty percent, and products that are made at low volumes at 10 percent. At present, India imposes 0-7.5 percent import duty on medical devices. In addition to import duty, importers pay 12 percent GST, but they are eligible for the input tax credit. AiMeD says that post-implementation of GST, importers are paying lower taxes than local companies. “Before the implementation of GST, imports of medical devices attracted 18.5 percent taxes including 7.5 percent customs duty, 6 percent countervailing duty (CVD) and 4 percent special additional duties (SAD). But for the CVD and SAD, importers never got any credit. So they got 10 percent saving on taxes, and haven’t passed them to the customers,” Rajiv Nath, Forum Coordinator of AiMeD, told Moneycontrol.

Nath says the Indian government should follow the example it set to curb imports of mobile phone handsets by extending it to medical devices. India imposed 20 percent duty on imported mobile phone handsets to promote domestic production. The move helped mobile phone manufacturers to set up assembling units in India. AiMed is also asking the Indian government to give preferential access to local manufacturers in public procurement. The medical device industry in India is presently valued at $5.2 billion and is growing at 12-15 percent. India imports about 80 percent of its medical devices. The domestic companies are largely involved in manufacturing low-end products for local consumption and exports.

Slowly some have started making devices of higher complexity such as stands, orthopedic and dental implants, and other medical equipment such as ultrasound machines, ventilators, among others. “We don’t have eco-system in place to indigenously make medical devices in India, we have to rely on imports for LCDs, molding, semi-conductor chipsets, for everything that goes inside. The smart move is to attract global companies to assemble in India, to slowly build the ecosystem like what China did two decades ago,” said Vinod Ramnani of Opto Circuits. US is the largest exporter of medical devices to India, constituting one-fifth of the pie, followed by Germany, China, Singapore, and the Netherlands.

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