Incentivise investment for MedTech manufacturing to accelerate ‘Make in India’; custom duty hike needs a roll-back

New Delhi, January 26, 2017: The import duties on medical devices and equipments have already been increased almost across the board by 7.3% in January 2016. Since most of the items affected were falling in the 11.6% range which has gone to 18.9% now, it means an effective duty increase of 62.7%.

“For products where the ability to import substitute is still far away, the high custom duties should be rolled back. Such custom duty increases, which are almost fully passed on to patients, will only tax the patients further due to increase in cost of treatment,” PavanChoudary, Director General, Medical Technology Association of India (MTaI) said.

“Moreover, since the custom duty regime in the neighbouring countries (Nepal, Bangladesh, Sri Lanka, Bhutan, Pakistan, Maldives & China) is now much lower than in India, the differential in duties created is likely to lead to the smuggling of many of the low-bulk-high-value devices. As that happens, not only will the Government lose revenue but also the patient will be beset with products without adequate legal & service guarantees,” he added

There is an urgent need to do the micro analysis of the sub sectors to know the requirements. Wherever import substitution of an acceptable quality level is not on the anvil, a duty roll back to previous levels should be made. Where such substitution can happen, the duties can be kept at the levels where they are, since they have had a disproportionately high climb last year, and these can be then gradually increased after a couple of years provided the duty level does not go way beyond what is there in neighboring countries and if quality deficient manufacture doesn’t find their way in to the market. In the absence of any immediate remedy, we will clearly find mortality traps gaping at us.

A process of incentivization (including lowest possible tariffs on raw material & components), research & development, skill development, greater health expenditure or better insurance coverage, low regulatory costs, assurance of predictable policy, will benefit the cause of Make in India rather than custom duty increase.

Corporate Comm India(CCI Newswire)