Will increasing the custom duty on medical devices promote indigenous production?

At the recent 4th WHO Global Forum on Medical Devices “Increasing access to medical devices” held in Visakhapatnam, Andhra Pradesh from Dec. 13-15, the Central government proposed increasing the custom duty on medical devices by 15-20% to promote indigenous manufacture of medical devices.

India is the fourth largest market in Asia after Japan, China and South Korea. It imports 80% of medical electronics, hospital equipment, surgical instruments, implants, diagnostic reagents.

GST came as another blow. GST does not differentiate between manufacturer and trader/importer. Simply, anybody whether he is a manufacturer or trader/importer can get GST input credit based on supply. Comparatively, trader/importer became beneficial to the extent of 11% and the manufacturer got financial disincentive to this 11%. As per Association of Indian Medical Device Industry (AiMeD), the current basic import tariff of 0% to 7.5% needs to be raised to 15% for medical devices and on their components to be 5%, next year 7.5%.

The Government had launched the “Make in India” initiative in 2014 with an aim to promote indigenous design and production of equipments, including medical devices and infrastructure.

To promote “Make in India”, lessons need to be learnt from other countries. For example, China does not allow Google. Instead, the search engine used in China is Baidu. It’s a 'Chinese' search engine.

Indigenous technology needs to be promoted, if we aspire to meet the goal of universal health coverage.

If we want to promote indigenous technology, then the availability of the imported technology should be with some riders, but it should not be banned entirely. The latest and the right technology, which is amenable to modifications suitable to our Indian settings, should be imported so that people can benefit from it.

One way to do this is to raise the custom duty on medical devices that are imported and make them more costly, as has been proposed by the Government.

Devices that are indigenously manufactured should be given a subsidy so that they are more accessible.

Some other ways to promote indigenous manufacture can be:

·           Reimbursements by CGHS, PSUs etc. should be only for ‘Made in India’ disposables, equipments, devices. If individuals opt for imported disposables, equipments, devices, then they will have to pay for the same.

·           Mediclaim can restrict reimbursements of foreign material, if the ‘Indian’ counterpart is available.

·           Government should encourage indigenous manufactured products. Perhaps they can be made compulsory, at least in the Government sector.

·           Only indigenous products should be used under Ayushman Bharat.

Most importantly, quality should not be compromised.

Dr KK Aggarwal

Padma Shri Awardee

President Elect Confederation of Medical Associations in Asia and Oceania   (CMAAO)

Group Editor-in-Chief IJCP Publications

President Heart Care Foundation of India

Immediate Past National President IMA