MTaI Seeks Lower Customs Duty on Medical Devices in Budget 2024

New Delhi, Jan 17 (PTI) Medical Technology Association of India on Wednesday sought lowering of customs duty to 2.5 per cent and removal of health cess ad valorem on medical devices in the upcoming Union Budget.

The industry body, which represents leading research-based medical technology companies with large footprint in manufacturing and training in India, also sought expansion in the coverage of government health insurance schemes to include day care surgeries.

"It is heartening to see that the government has placed affordability as one of its top priorities. However, the customs duties and taxes levied on medical devices in India are one of the highest in the world and highest among the neighbouring countries which directly impacts patient affordability; this is therefore contradictory to what the government is trying to achieve," Medical Technology Association of India (MTaI) Chairman Pavan Choudary told reporters here.

As per government data, more than 80 per cent of critical medical devices are imported into India to meet the rising demand for quality healthcare, he noted.

"We hope that as the preparation for the Union Budget 2024 gets underway, a correction on the tariff rates is urgently being considered," Choudary said.

Currently, basis customs duty on medical devices ranges between 7.5 per cent and 10 per cent and with the addition of other elements, it ranges between 27 per cent and 45 per cent.

"High taxation in the form of customs duty, and health cess, coupled with GST is detrimental to the interest of the patient as well as the industry. We believe customs duty rates should be lowered to 2.5 per cent for all medical devices," MTaI Director Sanjay Bhutani said.

Currently, India imports around 80 per cent of medical equipment required for various process from countries like the US, Germany and Japan.

"The rise in imports in India is primarily on account of the increasing demand for medical devices on the back of the rising population coupled with an increase in lifespan and lifestyle-related diseases," Bhutani said.

He noted that if the duty rates go down, the growth rate of FDI by medical technology firms could potentially double in the next few years.

In 2022, the FDI in the Indian medical technology segment stood at USD 407 million. It increased to USD 464 million in the January-September period of the last year.

As per the industry estimates, the size of the medtech sector in India is around USD 12 billion and expected to touch USD 50 billion by 2030.