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Aimed & Regulatory Update

AiMeD Calls For Separate Department, Flat GST At 12%, Among Other Measures In Upcoming Union Budget

The Association of Indian Medical Device Industry (AiMeD), in its recommendation to the Union Budget for 2023-24, has demanded to the Central government to bring down the Goods and Services Tax (GST) to a flat 12 per cent.

Besides, the AiMED has also asked for more support from the government to the domestic medical devices manufacturing industry to reduce the import dependence, which is at present to the levels of 80-85 per cent. Other demands include setting up a separate department for medical devices, collecting more granular import data, etc.

Rajiv Nath, forum coordinator of AiMeD, said that the industry is more than hopeful and positive that the government will act upon the request of the Indian Medical Device Industry for a Separate Department of Medical Devices. This key strategic need has also been recommended by the Parliamentary Committee on Health.

AiMeD also urged the government to consider shifting from an 8 Digit HS Code to a 10 Digit HS Code as done by USA and Europe to give more granular data for enabling better analysis and policy making.

"As done for mobile phones, the Government should protect the manufacturing base in India by increasing Basic Custom Duty on import of medical devices to at least 10 to 15% from current 0- 7.5% duty though WTO Bound rate is mostly 40%. Due to such low custom duty India is importing Rs. 63,200 crore of medical devices and is over 80% import dependent. This 80% can be reduced to below 30% with correct policies as done for mobile phones and consumer electronics," he said.

As part of its budget recommendation, the Association said that instead of 18% GST applicable on some medical devices that are not luxury goods, the GST needs to be a flat 12% for all medical devices. Also reducing GST to 5% is making Indian products noncompetitive to imports as then manufacturers are unable to keep reduced ex-factory prices based on lower input costs net of GST. Commenting on the need for trade margin monitoring, the Association said, "The purpose of low duty was to help
consumers get affordable access to devices. This objective is not realised if consumers will be charged a high maximum retail price (MRP) of 10 to 20 times import landed price. Customs recording of MRP on Bill of Entry will assist to bring in data generation for policy making by evidence of a Trade Margin Rationalisation
Policy for the manufacturer/importer so that there is a capping of maximum 4 times on the Ex-factory price and on import landed price of Indian distributor (at first point of sale viz. when GST/import duty is 1st levied on entering into the market)," it added.

It said that the medical devices imports continued to grow at an “alarming” level by 41 per cent in FY22. India imported medical devices worth Rs. 63,200 crore in 2021-22, up 41 per cent from Rs. 44,708 crore in 2020-21, as per data from the Union ministry of commerce and industry. China remained the top import source for India as medical device imports from China grew 48 per cent from Rs. 9,112 crore in 2020-21 to Rs. 13,538 crore in 2021-22. Imports from the US also increased steeply by 48 per cent to Rs. 10,245 crore in 2021-22 from Rs. 6,919 crore in 2020-21. The value of medical devices from China was nearly the same as the combined value of imports from Germany, Singapore and the Netherlands in 2021-22.

It has led to domestic industry players shutting shop as the local industry cannot compete with cheaper Chinese imports. This is a lost opportunity for Indian manufacturers to grow & compete globally but saw with dismay dumping of Chinese imports when duties were slashed to zero per cent. The overall trade deficit with China widened to a record $72.9 billion in 2021-22.

If the government implements even 70% of the recommendations recently made by the Parliamentary Committee on Health, we can see a reversal on the import dependence and
growth of the domestic industry which will bring in affordable wider access to medical devices leading to better healthcare delivery. We are very optimistic and hope that we can realise our vision to be among the top five manufacturing hubs in the world for medical devices.

"The Indian medical devices industry has the potential to reach $50 billion by 2030. We request kind consideration of the Government of India for encouraging domestic manufacturing to be sustainable in the long term for becoming AtmaNirbhar and to address National Healthcare Security needs exposed at the onset of Covid and for Ease of Doing Business," said the Association in a statement.


DoP Designates OSD To Carry Out Works To Set Up Export Promotion Council For Medical Devices

In an effort to initiate its actions towards setting up of the Export Promotion Council for Medical Devices (EPC-MD), the Department of Pharmaceuticals (DoP) has designated an official from the Engineering Export Promotion Council (EEPC) India as the Officer on Special Duty (OSD).

The DoP said that it initiated necessary action towards establishing the EPC-MD, and has designated Pallavi Saha, joint director of EEPC India as the OSD for the proposed Council, to be nodal officer of contact to carry out all the actions towards establishing EPC-MD on consultation with the Department. The arrangement is till a regular functionary is appointed for the EPCMD, it added.

It may be noted that in September this year, the Department of Commerce (DoC) has approved setting up a separate Export Promotion Council for the medical devices sector under the administrative control of the Department of Pharmaceuticals to help exporters in promoting their products in international markets. The medical devices industry welcomed the move and the strategic step will go a long way in accelerating the exports of medical devices from India.

The creation of the EPC for medical devices is approved by the DoC with one time waiver of the condition in guidelines on the subject, stipulating creation of an Export Promotion Forum initially, before its upgradation as EPC. According to the approval, the Council will be headquartered in YEIDA, Greater Noida, Uttar Pradesh with regional offices in Andhra Pradesh (in AMTZ, Visakhapatnam) and Telangana (in Hyderabad). The headquarters will be set up with initial funding of Rs 3 crore, in
free office space of around 5,000 sq.ft area at the upcoming Medical Devices Park Common Facility Centre in Greater Noida, and required secretarial staff to run the Council.

The Council’s administration and management will be through the Committee of Administration with elected and nominated members. The nominated members shall be from Department of Pharmaceuticals, Department of Commerce, Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Health and Family Welfare, Central Drugs Standard Control Organisation (CDSCO), Chief Executive Officers or Managing Directors of major medical device clusters or parks especially, including the MD of Andhra Pradesh MedTech Zone and chief executive officer of Hyderabad Pharma City etc.

The industry said that it is a great news, a big boost to Indian Medical Devices Manufacturing. The long sought and requested Medical Devices Exports Promotion Council is finally sanctioned to be created under the aegis of DoP, Government of India. This strategic step will go a long way in accelerating the exports and manufacturing growth of the medical devices sector, they said.

"We are excited that the long-sought and requested Medical Devices Export Promotion Council is finally taking shape under the aegis of DoP. This strategic step will go a long way in accelerating the exports and manufacturing growth of the medical devices sector to help realise our shared vision of India becoming a global manufacturing hub of medical devices," said Rajiv Nath, Forum Coordinator of Association of Indian Medical Device Industry (AiMeD).

An Office Memorandum in September further stated that the Chairman and Vice Chairman of the Council shall be elected from members who are manufacturers or processors of medical devices and other members, including from merchant exporters, shall not be eligible for the post. While the final decision on the jurisdiction will be taken by the CoA, the office in Visakhapatnam is expected to have jurisdiction over Andhra Pradesh, Orissa, Tamil Nadu and Chhattisgarh, the office in Hyderabad will have jurisdiction over the States of Telangana, Karnataka, Kerala and Maharashtra. The headquarters will serve the requirements of the member exports pan India till the regional facilities come up.

The entire range of medical devices goods and services could be broadly qualified into sub-groups named as panels, such as disposables, consumables, orthopaedic implants, IVD equipment and reagents and surgical instruments. There would also be panels for policy advocacy, technology upgradation and transfer and start-ups.

“The proposed council shall, inter alia, help exporters in promoting their products in international markets, through various promotional activities including organising/participating in international trade fairs, buyer-seller meets, RBSM in India, etc., in line with the foreign trade policy (FTP) of India,” said the Office Memorandum. The Council may also organise awareness programs for dissemination of information regarding assistance available for the MSME exporters under various government schemes. EEPC India will provide assistance and guidance to the new Council in discharge of its function for a period of five years.


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