Even before the ink on the Budget document has fully dried, the medical devices industry is seeking a 15% customs duty on an entire range of products such as x-ray machines, syringes, needles, urinary catheters, diagnostic instruments and sutures. The move is a bid to protect margins, after seeing a surge in imports.
Imports of medical devices have increased significantly by 24% to Rs 38,837 crore in 2018-19 from Rs 31,386 crore in the previous year, according to AiMeD, which represents the domestic industry. The customs levy would partly offset the “11% loss in competitiveness” against imports after the imposition of GST, which has inadvertently rendered domestic medical devices industry less competitive.
Before GST kicked in, import of medical device attracted around 18.5% levy (including 7.5% customs, 6% countervailing and 4% special additional duties). After GST, importers pay only customs duty in the range of 0-7.5%. As against this, costs remain the same for the domestic industry, making them less competitive, says AiMeD forum coordinator Rajiv Nath.
The medium and small enterprises- (MSME-) dominated medical devices industry is staring at the worst jolt ever due to GST as imports have become 11% cheaper, and hence shot up by 24% over the year,” he added.
Except the removal of customs duty on artificial kidneys to eliminate anomalies with finished goods imports, there was no announcement to reduce the over 80% import dependency on medical devices, domestic industry feels.
Trivitron Healthcare MD & chairman G S K Velu said, “The government has to look at medical devices’ domestic manufacturing in a holistic way and ensure the right ecosystem to reduce import dependency, which is growing every year in an alarming proportion.”
Imports of syringes increased by 58% to Rs 424 crore, mainly of auto-disable syringes from China, while digital thermometers were up by 64%. Weighing scale imports went up by 62% to Rs 52 crore, malaria diagnostic kits at Rs 75 crore (80%) and ultrasound machines 90% to Rs 172 crore. Imports of anaesthetic apparatus was up by 47% to Rs 201 crore, and x-ray machines to Rs 1,237 crore (31%).
The domestic industry has sought a phased manufacturing plan and WTO-permissible predictable tariff structure, linked with manufacturing capacity and international competitive capabilities. “For the devices not being made in India, we seek no change for now, but a predictable policy that in future should these attempted the investment would get similar duty protection in phases of 10% and then 15% to enable domestic manufacturing to be viable,” added Nath. – TOI