Rajiv Nath

Imports from China of price sensitive Medical Devices went up steeply by 75% from 5208 Cr. Rs. in 2019-20 to 9112 Cr. Rs. in 2020-21. This is an opportunity cost for Indian Manufacturers who could have grown in this period and created global competitiveness but saw with dismay dumping of Chinese import when duties were slashed to zero % at behest of Importer dominant FICCI & CII lobbies for Covid critical items instead of protecting Indian Entrepreneurs with safeguard duties to protect investors who stepped forward to help the country.

We suggest:

  1. Increase of Custom Duty: As done for mobile phones, the government should protect the manufacturing base in India by increasing basic custom duty on import of Medical Devices to at least 15% from current 0-7.5% duty though WTO bound rate is mostly 40%. Due to low custom duty India is importing 46,000 Cr. Rs. of Medical Devices and is over 80% import dependent. This 80% can be reduced to below 30% with correct policies as done for mobile phones and consumer electronics. The importer lobby’s excuse of increase in cost for patients due to increase in custom duty is highly misplaced since the consumer buys devices on MRP on these devices which is usually not impacted with custom duty increase / decrease.

On the basis of export performance (that validates domestic manufacturing capacity and capabilities) we suggest to increase custom duty as follows :

15% Duty 10% Duty 7.5% Duty
HS Code (some items) 30.02, 30.05, 30.06, 38.22, 40.14, 65.05, 90.01, 91.18, 90.21, 90.22, 90.27 & 94.02 HS Code (some items) 40.14 & 90.27 HS Code (some items) 38.22 & 90.27
  1. Inverted Duty Correction: To encourage domestic manufacturing, correct inverted duty structure of some items of HS Codes 30.05, 38.22, 40.15, 62.10, 90.18, 90.22 & 90.27.  Also we request to reduce import duty on raw materials to 2.5% on actual user condition basis as being done under Notification No. 50/2017 dt: 30.03.2021, Sr. No. 564.
  1. Trade Margin: The purpose of low duty was to help consumers get affordable access to Devices. This objective is not realized if consumers will be charged a high MRP of 10 to 20 times import landed price. Customs recording of MRP on bill of entry will assist to bring in data generation for policy making by evidence, of a Trade Margin Rationalization policy for the manufacturer / importer so that there is a capping of maximum 4 times on the Ex-factory price on import landed price (at first point of sale viz. when GST/ Import Duty is 1st levied on entering into the market).
  1. Uniform 12% Levy of GST: At present GST is being charged @12% on most of the Medical Devices falling under HS Code 9018, 9019, 9022 etc. However some of Medical Devices falling under different HS Codes like 4014 (except 40149030 which is already 12%), 4818, 8423, 9025, 9027 & 9402 and for 38089400 (Hand Sanitizer) are at a steep 18% GST. Kindly consider GST @ 12% uniformly across all Medical Devices categories as a Policy.

Also Read:- India Invites Investments of Rs 70,000 Cr in Medical Devices Sector & Woos Japanese Manufacturers: Rajiv Nath

We request the Government of India for encouraging domestic manufacturing to be sustainable in long term for becoming AtmaNirbhar Bharat and to address National Healthcare Security needs as defined in National Health Policy 2017 and for Ease of Doing Business.

Views expressed by Mr. Rajiv Nath, Managing Director, Hindustan Syringes & Medical Devices Ltd & Forum Coordinator, AiMeD

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