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MTaI urges Finance Ministry to reduce customs duty on certain medical devices

MTaI urges Finance Ministry to reduce customs duty on certain medical devices

Posted on January 19, 2024 Updated on January 17, 2024

Even as the central government is expected to present its interim budget for 2024-25 in less than three weeks, the Medical Technology Association of India (MTaI) has urged the Union Finance Ministry to reduce the customs duty on certain devices.

“India’s current tariff duty structure on medical device imports is very high. This high customs duty regime adversely impacts the costs of medical devices which contradict the government’s efforts to provide low-cost healthcare available to the masses through schemes like the Ayushman Bharat program (PMJAY),” said Pavan Choudary, Chairman, MTaI.

“Therefore, we request the government that for products where the ability to import substitutes is still some time away, the customs duty rate should be reduced,” he said.

In recent years, the Medical Device industry has benefited hugely due to noteworthy initiatives by the government, such as the National Medical Device Policy (NMDP), the Promotion of Research & Innovation in the Pharma-MedTech sector (PRIP) scheme, the establishment of medical device parks and elevation of branding and promotional strategies for the growth of the sector. This enterprising approach of the government is appreciation-worthy, he said.

That said, there are nuances in the medical device sector which comprises mechanical and engineering complexities. Unlike other sectors, most medical devices have a high value but are produced in low volumes. It may therefore not be economically viable to manufacture all devices in a single geographical area. Even countries with highly developed medical manufacturing hubs like the USA, Japan, Germany, etc. also rely on imports to cater to the healthcare needs of their country, he added.

The Association, which represents leading research-based medical technology companies with investments in manufacturing, R&D, and mealthcare worker training in India, is expected to come out with the details of its requests to the Ministry of Finance in the backdrop of the upcoming budget, soon.

It may be noted that, the Association last year before the Union Budget 2023-24, highlighted that issues that need to be addressed in the budget include its demand for reduction of high customs duties to 2.5% on medical devices, where the ability to import-substitutes is still some time away. The high customs duty has adversely impacted the costs for medical devices in India which contradicts the government’s efforts to provide low-cost healthcare available to masses through various healthcare schemes.

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Additionally, since the custom duty regime on most of the medical devices in many neighboring countries is lower than in India, the difference in duties created could lead to the smuggling of the 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 service guarantees, said Choudary in January, 2023.