Mumbai, June 11, 2019: Medical Technology Association of India (MTaI), which represents leading research-based medical technology companies with large footprint in manufacturing, R&D and training in India, today said Union Budget 2019-20 should reduce taxes and duties to enable continuous supply of quality medical devices in the country.
The current regulatory regime mandates absolute price ceiling for medical devices like orthopaedic implants and stents, and allows a limited 10% annual price increase for other notified products. This is irrespective of cost challenges and exchange rate increases faced by companies. Approximately, 70% of medical devices are imported into India to meet the rising demand for quality healthcare.
“India is witnessing a spurt in demand for quality healthcare, and our member companies are committed to providing the latest technology in the Indian market. Since the government is trying to reduce the cost of healthcare, it must do so without compromising the ability of the industry to bring innovation to the Indian patients, this also requires streamlining of the tax structure and rationalization of duty regime with immediate effect,” MTaI Director, Mr. Sanjay Bhutani said.
The following issues need immediate measures in the budget this year:
Additionally, since the custom duty regime on most medical devices in neighbouring countries of Nepal, Myanmar, Sri-Lanka, and Bhutan is lower than in India, the duty differential could lead to smuggling of low-bulk-high-value devices. The result will not only be loss of revenue for the government but also the patient will be beset with products which are not backed by adequate legal and service guarantees.
Comparison of customs duty in India with neighbouring countries
Item | HSN Code | India* | Sri Lanka | Bhutan | Nepal | Myanmar |
Orthopedic appliances and artificial implants | 9021 | 8.25% | Nil | Nil | Nil | 1.5% |
Surgical Instruments and Appliances | 9018 | 8.25% | Nil | Nil | 5% | 1.5% |
*Includes Social Welfare Surcharge @10% of import duty
Another point to note is that China, which has near self-sufficiency in segments like consumables, has reduced custom duties from 4% to 3.3% recently to avoid the problem of smuggling and to inject competition in the sector.
GST on Trials and Samples: GST should not be charged on trials and samples as doctors need samples/free trials/demos in order to satisfy themselves on efficacy of product in best interest of patients. Cost of trials are already built into cost structures and is a business expense.
GST on Expiries: Medical device suppliers take back product expiries as per best business practice, and in order to ensure product availability at all times. However, the input GST needs to be reversed on such expiries which causes undue loss to the Industry, raising their cost of operations. We recommend that for market expiry replacements, the GST credit be available to suppliers as normal supplies. Cost of expiries are already built into cost structures and hence is a business expense and not allowing input credit contradicts basic edifice of GST
Corporate Comm India(CCI Newswire)
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