Union Budget 2024: The Association of Indian Medical Device Industry (AiMeD) has appealed to the government to consider a strategic increase in customs duty on medical devices, proposing a raise to a nominal range of around 15 per cent. In its pre-budget memorandum submitted to the Ministry of Finance, Union Health and Family Welfare Minister JP Nadda, Secretary Apurva Chandra, and Department of Pharmacy Secretary Arunish Chawla, AiMeD emphasised the need to revise the current customs duty rate of 7.5 per cent. This step, according to AiMeD, aims to bolster the domestic medical device manufacturing sector and align with broader economic strategies.
“This will foster a more balanced trade environment, encouraging domestic manufacturing and reducing reliance on imports, which currently still constitutes a staggering 70 per cent of the sector,” said Rajiv Nath, Forum Coordinator, AiMeD, as per news agency IANS. “The imports of medical devices are consistently over Rs 61,000 crore for the last three years and regretfully this year, increased by 13 per cent to Rs 69,000 crore,” he added.
Proposed health cess and margin capping for medical devices
A significant concern flagged by AiMeD in the memorandum is the prevailing inverted duty structure. To address this, AiMeD proposed the implementation of a 5 per cent health cess on custom duty for the remaining medical devices as this was earlier applied to a limonite’s medical devices, and this health cess was used to fund resources for Ayushman Bharat. “This correction is expected to harmonise the duty structure, making it more conducive for local manufacturers to thrive and be competitive globally and locally,” Nath said. Another pivotal aspect highlighted by AiMeD is the necessity for trade margin capping.
Additionally, Nath emphasised that the Union Budget for FY 2024-25 should introduce income tax incentives specifically aimed at encouraging capital expenditure (CAPEX) and research and development (R&D) investments within the medical devices sector. He urged the government to consider raising the basic customs duty from the current range of 0-7.5 per cent to a higher bracket of 15-20 per cent for non-Information Technology Agreement-1 devices. This, he argued, would stimulate quality production and boost exports while ensuring fair competition for domestic manufacturers by removing input tax credit for Integrated Goods and Services Tax (IGST) on items with zero import duty.
Incentive scheme proposed to boost Indian medical device industry
Furthermore, Nath stressed the importance of halting the import of used or old medical devices to ensure safety, environmental protection, and foster the growth of the domestic industry. He proposed the introduction of a Performance Linked Incentive scheme to promote value-added production, especially for high-import products, thereby supporting the expansion and competitiveness of the Indian medical device sector.
(With inputs from IANS)
