As the Union Budget has been announced, experts from India's medical devices industry aren't too happy, they've termed it ‘disappointing’, further adding that while there have been a number of measures announced which indicate an overall macroeconomic push, there has been no investment promotion measure for the 70% imports dependent medical devices sector.
Finance Minister Nirmala Sitharaman announced in her Budget speech that the government intends to set up a Manufacturing Mission and support measures for the MSMEs and Startups.
Measures to boost R&D and innovation in the domestic industry were also announced. Along with this, the government announced its intention to have a trust-based light regulatory mechanism.
“The industry is disappointed that expectations of the medical devices sector, many of which had been supported by the Department of Pharmaceutical too as an investment enabler under the National Medical Device 2023 policy finds no mention in the speech. We were hoping to see the finance minister speak about Medical Devices as make in India's enabler and address the 70% import dependence due to inadequate tariff protection with duties at zero to 7.5% in most cases and an ever-rising imports bill that is expected to cross Rs 75,000 crore this year," said Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD).
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Experts from the industry added that they expected an increase in customs duty to a nominal 10% to 15% and as a Predictable Tariff Policy, correction of Inverted Duty by levying a Health Cess of 5% custom duty on balance Medical Devices. In 2020, this was applied to only 5 of the 4-digit HS Codes and balance 22 HS Codes are pending.
They also expected the trade Margin Capping by monitoring MRP of Imports, Income Tax benefits for CAPEX and R&D investments in Medical Devices and standardising the GST rate of 12% across all medical devices as a way to simplify the tax structure, ensuring consistency and ease of doing business.
"We are, however, pleased to note the budget allocation for schemes to promote medical devices manufacturing has bed increased to Rs 5,200 crore up from Rs 3300 crore,” Nath added.
Pavan Choudary, Chairman, Medical Technology Association of India (MTaI), said, "The budget is well-informed and thoughtfully attuned to current needs. We are reading the fine print and hope to see some reductions in customs duties on medical devices which are not import substitutable in the near term."
Earlier on January 16, MTaI had issued a statement saying that the government had suspended all imports of refurbished medical devices until the Ministry of Health and Family Welfare (MoHFW) established a policy framework for such imports.
"The pre-owned medical equipment market currently constitutes around 10% of the total medical equipment industry in India, playing a critical role in meeting the growing demand in tier 2, 3, and 4 cities, as well as rural and underserved areas. These regions, where 70% of healthcare facilities are privately run small clinics, nursing homes, standalone hospitals, and diagnostic centres, rely heavily on cost-effective solutions," the association noted.
It mentioned that globally, developed regions permit the import and sale of pre-owned medical equipment in accordance with their regulations. The Pre-owned equipment industry in India is valued at Rs 1,500 crore and supports the livelihoods of thousands of employees across its ecosystem, hence, the association had urged the government for a "swift implementable policy for expediting the import of refurbished devices."