Medical devices industry appeals PM to rationalize duty structure

Unless, skewed and lopsided duty structure is rationalized, manufacturing of medical devices in India will never really take off, with or without Green or Brown FDI, believes the Association of Indian Medical Devices Industry (AIMED)


Problem not solved! The skewed tax structure has resulted in making India heavily import dependent in medical devices with overall import dependency at 70 per cent and as high as 90 percent in some segments such as electronic medical devices.

The AIMED has requested the prime minister Narendra Modi to help in rationalized inverted duty structure on medical devices​ ​​t​o encourage manufacturing in India.

"Every Finance Minister laments about downslide in manufacturing but does not take the steps to create the rational tariff structure to encourage this. Succor may be given to dead/dying units when it's too late on piecemeal basis without a structured reform and segment specific strategy," said the association in a statement on January 13, 2015.

AIMED has pointed out that currently import duty on finished medical device is far lower than duty on raw materials and inputs that go into making of medical devices resulting in making imports much cheaper than domestically manufactured devices."Indian medical device industry is poised for quantum jump. But we will lose a wonderful opportunity to leverage this situation and make India a global manufacturing hub if taxes are not rationalized," said Mr Rajiv Nath, Forum Coordinator, AIMED.

"Unless tax anomalies are removed, manufacturing of medical devices in India will not really take off, with or without FDI, more important , the healthcare security of the country is at stake" Mr Nath has added.

AIMED has advocated immediate reversal of this skewed tax structure to create a level playing field for domestic manufacturers and to encourage manufacturing within the country? We are not asking for 40% duty protection like the automobile industry, we can compete, but at least give us a level playing field.

"India manufactured goods are further disadvantaged by (a) Export encouragement policies followed by countries like China and; (b) import substitution policies in the form of ‘Preferential Public Procurement Policies' that are again followed in countries such as US and China to encourage domestic manufacturing ", said Dr Velu , managing director of Trivitron.

For example, the Chinese government subsidizes all exports of medical devices by 17 percent. So even if an exporter sells below cost by 7 percent, he still makes a profit of 10 percent! This is topped by 25 percent Preferential Pricing Policy for Chinese manufacturers with 0 percent foreign equity. We don't even have a Buy Indian formal policy, even USA has a Buy American policy, he quipped.


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