Domestic Indian Device Companies Welcome Duty Hike on Imports

Indian medical device manufacturers are praising the country’s government for its recent decisions to hike the duty on imported devices, reimpose the special additional duty on the imports and reduce taxes on raw material imports.

“The move is the first big boost to unshackle India from perilous import dependency in a critical sector. It will catalyze domestic manufacturing of medical devices and will go a long way in ensuring [the] big success of [Prime Minister Narendra] Modi’s ‘Make in India’ mission,” says Rajiv Nath, forum coordinator of the Association of Indian Medical Device Industry.

Last week, the Ministry of Finance announced that the rate of basic customs duty on certain specified medical devices increased from 5 percent to 7.5 percent. Also, the exemption from special additional duty on the devices was withdrawn, and the SAD of 4 percent was reimposed.

“Further, to give fillip to domestic manufacturing, basic customs duty is being reduced to 2.5 [percent] along with full exemption from SAD on raw materials, parts and accessories for [the] manufacture of medical devices,” the ministry says in a Jan. 19 statement.

Nath says the previous system had made imports far cheaper than domestically produced goods, as the taxation burden on domestic manufacturers was far higher. The taxation regime — which was heavily biased towards imports — had resulted in significant cost differential between domestically manufactured goods and imports, making imports far cheaper, he explains.

The net impact was serial closure of domestic units, making India dangerously import dependent, Nath says. India has general import dependency of more than 70 percent in medical devices and up to 90 percent in the niche and electronic medical device segment. — Jonathon Shacat