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Government Hikes Import Duty On Some Medical Devices

India is dependent on imported devices for about 70 per cent of its needs. The reliance on imports is 90 per cent in certain niche and electronic medical device segment

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To provide impetus to the domestic medical devices sector, the government has increased import duty on certain healthcare equipment to 7.5 per cent from 5 per cent earlier.

"Rate of basic customs duty on certain specified medical device increased from 5 per cent to 7.5 per cent," the Finance Ministry said in a statement.

Simultaneously, the exemption from additional customs duty (special additional duty, SAD) on these medical devices has also been withdrawn, and they will now attract 4 per cent SAD.

"Further, to give fillip to domestic manufacturing, basic customs duty is being reduced to 2.5% along with full exemption from SAD on raw materials, parts and accessories for manufacture of medical devices (falling under headings 9018 to 9022)," the statement added.

The concessional basic customs duty on hospital equipment for use in hospitals run by government or registered societies, and certain assistive devices, rehabilitation aids and other goods for disabled will, however, continue.

Welcoming the move, the local medical device manufacturers body, Association of Indian Medical Device Manufacturers (AIMED), said it is the first big boost to unshackle India from perilous import dependency in a critical sector.

India is currently dependent on imported devices to the extent over 70 per cent. It is 90 per cent in certain niche and electronic medical device segment.

Responding to the import duty hike, AIMED coordinator Rajiv Nath said, "The earlier taxation anomalies had made imports far cheaper than domestically produced goods as taxation burden on domestic manufacturers were far higher. The earlier taxation regime which was heavily biased towards imports had resulted in significant cost differential between domestically manufactured goods and imports, making imports far cheaper. The net impact was serial closure of domestic units and making India dangerously import dependent."

In line with its "Make in India" campaign, the government had constituted a task force to examine various issues concerning the domestic medical devices sector. The task force had made certain recommendations regarding rationalization of customs duty structure for the sector so as to promote domestic manufacturing of medical devices.