“Budget – A big blow to ‘Make in India’ vision” by Mr Rajiv Nath, Forum Coordinator AIMED

New Delhi, Mar 06, 2015
This budget completely overturns the ‘Make in India’ vision especially for medical devices making one wonder if it was a sham advertisement meant only for scoring some brownie points and creating a false sense of coming ‘acche din’ for the industry. Why will anybody including MNCs ‘Make in India’ if it remains cheaper to import than to manufacture the same products here accompanied by all the difficulties of setting up a production unit and running the business? Who are we trying to kid?

The government did not think it fit enough to rationalize inverted duty structure which has been a major cause for discouraging manufacturing here and making most Indian goods more expensive than imports and this being especially true for medical device products. To top it, government actually went ahead and raised excise duty, increased service tax and also quietly raised petrol and diesel prices – all these will further make manufacturing more expensive here.

It claims to assure to reduce income Tax in 5 years and at same increases effective Income Tax to 34.61% up from 33.99% !

All these Task Forces by various ministries to drive domestic manufacturing of Medical Devices to address the 70% import dependency and dip in production or for realizing make in India as a Focus Sector are for what purpose if Finance Ministry and Revenue department is working at cross purposes with other stakeholder Ministries like DIPP , DOP, DIETY, DoC , MSME and not act on their recommendations or of the Tariff Commission?

Very partial & negligible token relief has been provided on pace makers and endoscopes. There is nothing structural to drive manufacturing of Medical Devices in India or make domestic companies competitive and expand market share from below 20-30%. Is the Government seriously concerned about manufacturing in India or is it only lip service? There are a few tweaks on the inverted duty structure but limited to only 2-3 items like Pacemakers and Endoscopes by 2.5% reduction in Raw Material costs! Reducing CVD makes imports competitive as manufactures can’t set off Modvat on inputs. Even the Economic Survey recommended doing away with Excise Duty concessions as Indian companies loose out to imports.

Also reduction of SAD is not going to help domestic manufacturing become more competitive. We have seen that as a problem in Medical Devices and instead of reversing this, this has actually been applied to most consumer goods! How will government realize the PM’s Make in India vision?

If government cannot take care of domestic investors and industry and provide a rational tariff regime to allow manufacturing to thrive in India how will overseas investors thrive? “It’s a budget which tries to paint a picture of coming ‘Acche Din’ but for now, one can see the Government is not ‘Walking the Talk’ and government departments are not in sync on a vision or a strategy!”

Good Luck to our experts in Finance Ministry! And lets us forget ‘Make in India’ for now!
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