UNION BUDGET 2024 | AiMeD HAILS VISIONARY BUDGET FOR MEDICAL DEVICE SECTOR |
BUDGET REACTIONS
The Association of Indian Medical Device Industry (AiMeD) on Tuesday hailed the Union Budget-2024 presented by Finance Minister Nirmala Sitharaman in the Parliament today as visionary and progressive, with the potential to significantly boost the country’s overall economic growth.
In a statement, AiMeD Forum Coordinator, Rajiv Nath said, “The Union Budget-2024 is visionary and progressive. It will give a boost to the country’s overall economic growth. It reflects the determination of Prime Minister Narendra Modi to realize the goal of a US $10 trillion economy by 2030 and Viksit Bharat by 2047.”
Mr Nath highlighted the nine priorities of the government – productivity and resilience in agriculture; employment and skilling; inclusive human resource and development, and social justice; manufacturing services; urban development; energy security; infrastructure; innovation and research and development; and next-generation reforms – which he believes will act as a catalyst for the country’s overall economy.
Speaking specifically about the medical device industry about the Union Budget-2024, Mr Nath expressed gratitude towards the government for reducing the duty on the import of components for X-ray equipment until they can be produced domestically. “This enables continuity in investment in efforts to become a manufacturing hub of X-ray equipment globally,” he added.
In a recent representation to Arunish Chawla, Secretary, Department of Pharmaceuticals (DoP), dated January 19, 2024, AiMeD had raised concerns regarding the increase in custom duty and the removal of benefits for importing X-ray tubes and flat panel detectors under the Phased Manufacturing Programme (PMP). Mr Nath appreciated the government’s relief measures, given the absence of domestic manufacturers for these critical components.
However, Mr Nath also expressed a degree of disappointment, stating, “We at AiMeD had hoped that the recommendations of the Department of Pharmaceuticals, backed by the Directorate General of Health Services (DGHS), would have resulted in a nominal duty increase on at least those medical devices that India had substantial manufacturing capacity for, as demonstrated during the Covid-19 pandemic.”
During the COVID-19 pandemic, the Indian medical device sector showcased its resilience by manufacturing syringes, masks, oximeters, oxygen concentrators, and certain testing kits, while global leaders struggled to meet demand. Mr Nath believes that the removal of nil duty exemption on some of these devices would have further enabled the Make in India initiative and enhanced global competitiveness.
In their Pre-Budget memorandum, AiMeD had urged Finance Minister Sitharaman to consider a strategic hike in customs duty on medical devices to a nominal 10-15 percent. This, according to Mr Nath, would foster a more balanced trade environment, encouraging domestic manufacturing and reducing reliance on imports, which currently constitute a staggering 70 percent of the sector.
“The imports of medical devices have consistently been over Rs 61,000 crore for the last three years and, regretfully, this year have increased by 13 percent to Rs 69,000 crore,” said Mr Nath, highlighting the issue of the prevailing inverted duty structure.
To address this, AiMeD proposed implementing a 5 percent health cess on custom duty for the remaining medical devices, similar to the one previously applied to certain medical devices, with the proceeds funding resources for Ayushman Bharat.
Another crucial aspect highlighted by AiMeD was the necessity for trade margin capping. “By monitoring the Maximum Retail Price (MRP) of imports, the Government will curb the excessive mark-ups often seen in the market. This measure will make medical devices more affordable and accessible to the Indian populace, ultimately benefiting public health as consumers are affected not by import duty protection as much as by artificially inflated MRP of medical devices,” said Mr Nath.
Referring to one of the core focuses of the National Medical Devices Policy-2023, which aims to reduce import dependence by 70 percent and make India a global manufacturing hub of medical devices, Mr Nath emphasized the need for the Central government to consider income tax benefits specifically tailored for capital expenditure (CAPEX) and research and development (R&D) investments within the medical devices sector.
“Such fiscal incentives are crucial for fostering innovation, enhancing production capabilities, and propelling India towards self-reliance in medical technology,” Mr Nath added, noting that AiMeD’s suggestions are not just about immediate economic adjustments but are part of a strategic blueprint aimed at revitalizing India’s medical device industry, which has significant global competitiveness potential and saw a rising export graph of Rs 32,000 crore last year.