AiMeD Writes to FM Asking Action to Curb Surging Imports

AiMeD highlighted that imports have consistently exceeded INR 60,000 Cr for the past two years, and a further 20% increase is anticipated in the current year.

The Association of Indian Medical Devices Industry (AiMeD) has urged Union Finance Minister Nirmala Sitharaman to implement measures, including increased customs duty, a predictable tariff policy, and monitoring the Maximum Retail Price (MRP) of imports.

These steps are aimed at fostering domestic manufacturing within the sector. Also, the submission of the plea to the FM is in response to the alarming surge in the import of medical devices, particularly from the top five major importers to India.

Over the past 12 months, from November 2022 to October 2023, medical device imports escalated by 21%, reaching INR 61,262.84 Cr compared to INR 50,641.59 Cr during the same period the previous year.

AiMeD expressed its concern, highlighting that imports have consistently exceeded INR 60,000 Cr for the past two years, and a further 20% increase is anticipated in the current year.

AiMeD’s Call for Increased Customs Duty

The association emphasised the need to raise customs duty on medical devices currently subjected to 0 -7.5% basic customs duty (BCD) to a range of 5% to 15%.

AiMeD argues that such adjustments are necessary, especially when there is ample domestic manufacturing capacity, to address India's 80% import dependence. The association supports removing duty exemption notifications in line with the recommendations of the Department of Pharmaceuticals and the National Medical Device Policy 2023.

Further, AiMeD has extended its request for the upcoming Union Budget 2024-25, urging the government to take decisive action. The association noted that its proposal for the Union Budget 2023-24 was not considered despite the Department of Pharmaceuticals supporting a review of tariff policies.

AiMeD also called for a rescheduling of the duty revision for key components of X-ray equipment due to the delay in manufacturing these components, leading to an inverted duty structure.

Apart from advocating for increased customs duty and a predictable tariff policy, AiMeD suggested corrective measures for the inverted duty by imposing a 5% customs duty cess on remaining medical devices.

The association recommended capping the trade margin if it exceeds 10-20 times the cost, insurance, and freight (CIF) price. Additionally, AiMeD proposed allowing income tax benefits for investments in the medical devices sector.

Concerns Over Steep Import Increase

Additionally, AiMeD voiced dismay over the persistent upward trend in imports, especially a 21% increase over the last 12 months, amounting to INR 61,000 Cr compared to INR 50,000 Cr in the preceding 12 months.

Rajiv Nath, the forum coordinator for AiMeD, emphasised the need for policymakers to review the significant 33% increase in imports from the USA and a steep 27% growth from Germany.

According to AiMeD's data, imports from the Netherlands surged by 20% to INR 3,552.02 Cr from November 2022 to October 2023, compared to INR 2,956.65 Cr in the same period the previous year. Imports from Singapore also increased by 15% to INR 5,520.59 Cr. Furthermore, imports from China grew by 11% to INR 10,384.62 Cr during the same period.

AiMeD countered critics questioning the logic of duty protection, asserting that the medical devices industry is not seeking 40% or 100% duty protection but rather a nominal 15% to neutralise the 15% disability factor of manufacturing in India.

The association pointed out the inconsistency in the government's approach, allowing the domestic automobile industry to enjoy duty protection exceeding 100% while the medical devices industry seeks a modest adjustment.

AiMeD emphasised the importance of the government considering its recommendations over the influence of Chambers of Commerce lobbies, which the Indian offices of importing companies may influence. The association stressed that the Government of India must prioritise domestic manufacturing and take steps to reduce dependency on imports.

As the medical devices industry grapples with soaring imports, the ball is now in the government's court to address the concerns raised by AiMeD. The proposed measures, including increased custom duty, a predictable tariff policy, and monitoring of Maximum Retail Price, aim to create a conducive environment for domestic manufacturing.

As India navigates its economic landscape, finding the right balance between competitiveness and protectionism becomes crucial for the sustainable growth of the medical devices sector.