5% Cess on Medical Devices Imports May Raise Healthcare Cost

With Finance Minister Nirmala Sitharaman on Saturday proposing a health cess of 5 per cent on imports of specified medical equipment to boost manufacturing in India, the cost of healthcare may increase for people until such equipment pieces are produced domestically.

There are also fears of rise in smuggling of such products from neighbouring countries where tariffs are already lower, according to the Medical Technology Association of India (MtaI), an association of research-based medical technology companies.

Presenting her second Union Budget, the Finance Minister said that proceeds from taxes on medical devices would be used to support health infrastructure in India.

“A 5 per cent cess on customs duty for imports has been imposed on medical devices in the Budget which will increase the cost of imported medical devices. Ultimately, the patients will bear this cost and affordability will decrease,” Sanjay Bhutani, Director, MtaI, said in a statement.

“This is against the basic ethos of PMJAY (Ayushman Bharat Yojana or Pradhan Mantri Jan Arogya Yojana) wherein the government wants to provide affordable healthcare for all,” Bhutani said.

Calling it a “retrograde” measure, MtaI said the health cess of 5 per cent on imported medical equipment will hit the global companies which provide more than 80 per cent of the critical care medical devices.

The measure will also impact “the patient who gets exposed to the danger of smuggling of these low bulk and high value devices, without service and legal guarantees from neighbouring countries where the tariffs are already lower,” Bhutani said.

However, India’s medical devices industry has hailed to move to boost domestic manufacturing.

“Finally we may have something to help address the over Rs 38,837 crore, 80-90 per cent import dependent Indian medical devices sector,” Rajiv Nath, Forum Coordinator of Association of Indian Medical Device Industry (AiMeD), said in a statement.

“It’s an excellent idea to tax imports of medical devices to fund the capacity building of healthcare delivery in public healthcare and with twin advantage of accelerating medical devices manufacturing as a ‘Make in India’ enabler so that Indian national healthcare security concerns are addressed — the inadequacy of which is being exposed in ongoing crisis to address the coronavirus epidemic preparedness,” said Nath.

AiMeD is an umbrella association of Indian manufacturers of medical devices covering all types of medical devices including consumables, disposables, equipment, instruments, electronics, diagnostics and implants. (IANS)