Opinion: Rajiv Nath
Budget 2018 is a big letdown for the domestic medical device industry
Friday, February 2, 2018

We were expecting the government to move forward on promised reforms and take conducive measures to boost domestic manufacturing of  medical devices. It is frustrating that the government has not announced any measures  to  promote growth of $10 billion Indian medical device market in the budget as has been done for consumer electronics, food processing, footwear, etc. It reeks of step-motherly treatment.

The sector was looking forward to clear and specific promotional measures since it was one of the first five sectors included in the ‘Make in India’ initiative. Regrettably, nothing has been done to improve domestic manufacturing in the sector. And that too when the Indian medical device industry has opted for self-regulation wherever necessary for strengthening the government’s hands  in improving affordable healthcare in the country.

Though the budget’s focus on providing universal healthcare services is a step in the right direction for building a healthy nation, the domestic medical device industry is left in the lurch by not giving it necessary protection against imports.

Nominal tweaking in custom duty applicable to medical devices is urgently needed to address Rs 27300 crore import bill and 70-90% import dependency. Other sectors like automobile and mobile phones are flourishing with custom duty protection while medical devices industry is left to fend for itself. 

If the government is serious about ‘Make in India’,  it can still include some of our minor legitimate demands,  which will go a long way in making medical device industry internationally competitive and boost ‘Make in India’ program.

These demands include:

(a) The government needs to increase the basic import duty on medical devices in the range of 10-15 per cent to make manufacturing more viable than importing, and give nominal protection to investors.

(b)Withdrawal of concessional duty notification of basic duty and special additional duty of medical devices and for reverting of duty on the items covered under HS 90.27, 30.06 and 38.22

(c) Imposition of 10% basic duty on HS 90.27 & HS 30.06 (mainly Diagnostics - equipment & reagents)

(d) Reduction of duty on raw materials to produce these devices and diagnostics to 2.5%.

In addition, we also need to think of consumers, and the government  should consider  introducing  a tax innovation structure of stalling artificial inflation of MRP by imposing a one per cent GST Cess on it to  create  a disincentive to importers  from passing on the  effect of duty increase to the consumers and even by indigenous manufacturers . This will make Indian medical devices, including diagnostics, competitive and safeguard consumers from artificial inflation and exploitative high MRP.

If the government had focused on giving a major boost to medical device manufacturing in the country and also ensured a robust MRP regime,  it would have served many purpose with one shot – lower the overall healthcare cost and lead to sharp reduction on import dependency.

The additional critical benefit would have been quality job creation within the country.

 

--The writer is forum cordinator, Association of Indian Medical Device Industry. Views expressed are personal

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