Budget 2023: Medical equipment manufacturers ask for a GST reduction to combat imports from China and the US

The nation’s medical device manufacturers have requested targeted government support in the form of size-specific financial incentives and policy support in the 2019 Union Budget in response to an increase in imports from nations like China, the US, and Germany.

Instead of the existing 18 percent rate that is applied on specific medical equipment, the Association of Medical Device Industry seeks a flat GST rate of 12 percent for all medical devices.

The basic customs duty on the import of these devices should be increased to at least 10 to 15 percent from the current 0-7.5 percent, it demanded. “Also, reducing GST to 5 percent is making Indian products non-competitive to imports as then manufacturers are unable to keep reduced ex-factory prices based on lower input costs net of GST.”

According to the association’s analysis of government data, medical equipment imports in the nation increased by 41% to Rs 63,200 crore in 2021–22 from Rs 44,708 crore the year before.

As a result, domestic industry players have closed their doors because they cannot compete with cheaper Chinese imports, according to Rajiv Nath of AiMeD. “This is a missed chance for Indian manufacturers to expand and compete on a global scale, but I watched with dismay as Chinese goods were dumped when tariffs were reduced to zero percent.”

Refine current systems

The industry anticipates a considerable increase in healthcare spending, which will go a long way toward closing present gaps and generating more demand for the industry’s growth, according to Pavan Choudary, chairman and director general of the Medical Technology Association of India (MTAI).

“We also hope that the Union Budget 2023 gives a fillip to MSMEs in this field by modifying the current procedures to make taxation and credit lending simpler, and by offering incentives to those who wish to participate in these small and medium firms,” he said.

According to industry insiders, the Indian market for medical devices has the potential to grow to $50 billion by 2030, but in order to do so, the government must encourage the sector to become self-sufficient and sustainable over the long term in order to address the COVID-19-identified needs for a secure national healthcare system.