EU medical devices at zero duties, while India pays 30 percent tariff?

The ninth round of Free Trade Agreement dialogue between 27-nation European Union (EU) and India is being held in the Capital. The five-day talks started from September 23. The two sides are negotiating a free trade agreement, an investment protection agreement and an agreement on geographical indications (GIs). Both sides are discussing core trade issues covering goods, services, investment and government procurement along with necessary rules such as rules of origin, and technical barriers to trade.

“After implementation of the trade agreement, the EU products will continue to enter India at zero duties, but Indian products may pay 20-35 per cent tariff equivalent as CBAM charges. A suitable text may be inserted in the FTA chapters dealing with this possibility,” according to think tank Global Trade Research Initiative (GTRI), Founder Ajay Srivastava.

Negotiations are on and allowing medical device imports at zero duty is under consideration.

Association of Indian Medical Devices Industry, has written to the joint secretary, DoC, Medical Devices that this move would be detrimental to the 70-percent import dependant industry, and medical devices be excluded from the list. India could seek speedier EU certification, a stringent Legal Manufacturer label so that country of origin condition restriction is adhered to and have a verification process by BIS and CDSCO in place to support Make in India initiative and PLI scheme.

Rajiv Nath, Forum Co-ordinator, AiMeD in the appeal brings the authorities’ attention to the matter. He points out that the Indian manufacturing industry needs that Make in India initiative and PLI Scheme be taken to their logical conclusion. The govt is giving mixed signals to Indian Investors by incentives like PLI Scheme and Make in India Policy but actually not protecting investments done by restricting:

1. Import of preowned equipment,
2. Expanding GTE-listed medical devices even made in India, and
3. Permitting zero duty imports without factory inspection of medical equipment when already at very low at 7.5% duty rate.

The suggestions as listed by AiMeD.

“EU Trade Talks Suggested Agenda items for Medical Devices

• India needs to seek (and focus on) Mutual Recognition Agreement of Regulatory Approval / QMS Certification like ICMED and CDSCO manufacturing license for enabling bridge audits / fast tracking / reduce audit costs so these are reduced non-tariff barrier which are expensive, cumbersome and time delayed via CE certification required for Indian exporters to enter into EU medical device market. Alternatively we need a tit-for-tat policy of inspection of EU factories and verification of compliance to Indian MDR and Domestic Content in EU by Indian regulators.
• We recommend factory inspection and verification by BIS & CDSCO inspectors for country of origin with value addition of 35% and change of sub tariff headings as both mandatory minimal conditions for protecting Indian manufacturers.
• Strong caution. The regulatory system for medical devices in EU has the system of permitting organizations to label themselves as a ‘Legal Manufacturer’ even if they are not making the product themselves. This was done to allow EU regulators to make market authorised holder to be responsible & accountable from the patient safety perspective but this facility has been abused and lead to pseudo manufacturing to thrive in EU as country of origin is not insisted upon on the labelling of medical devices in Europe & UK, unlike the case of USA & India, which seek labelling of country of origin on unit of sale.
• Legal manufacturers to be kept out of FTA. We have been given assurance in past for UK-India FTA that ‘Legal Manufacturer’ labelled packages will not enjoy zero duty FTA benefits if the manufacturer / exporter is not an actual manufacturer and not able to prove that he assembles and manufacture the medical device in UK with at least 40% value addition. We seek to know how will this assurance be enforced ? That is why need for verification inspection by CDSCP & BIS.
• In the history of India’s FTA with various countries, India has been at a losing point except for neighbouring countries like Nepal, Bangladesh, Bhutan, Sri Lanka etc. Other countries like China, Singapore, Malaysia, Japan, South Korea, Thailand, Argentina, Vietnam, Indonesia, Philippines, New Zealand etc., have gained much more than India, i.e., they have exported to India in very large quantity than India. For Exim data of FTA countries enclosed to support this refer to link below.”

Click, for: EXIM data showing India-EU trade in medical devices.
MB Bureau