Budget 2018: Domestic medical devices manufacturers cry foul

Mumbai: Budget 2018 came as a rude shock to domestic medical device manufacturers as the finance ministry decided that while it will raised the customs duty (to protect the local industry and encourage Make in India) to 10 per cent on certain devices as against the current 7.5 per cent, At the same time, the government provided 2.5 per cent exemption to device importers.

The move has indeed not gone well with the domestic device manufacturers who have termed the development “a deathblow”. The Rs 9,000-crore domestic industry suspects “foul play at the behest of the powerful US medical devices industry lobby”, and has decided to ask the government to investigate the issue.

Speaking with Business Standard, Rajiv Nath, forum coordinator, Association of Indian Medical Device Industry (AiMed), “When the exemption list arrived, we were strongly disappointed. Giving an exemption of 2.5 per cent to importers effectively means there is no net change in customs duty. This would definitely not trigger Make in India. Why would a multinational bother to even make in India when it can import at such low duties, leave alone the domestic manufacturer,” he said. He further added that if government departments do not take supportive steps, around 25 per cent of the units might face closure in the next two years.

Speaking with TOI, he said, “Our market share is coming down drastically, with nearly 90% of devices imported, including even basic products like syringes, needles, and thermometers. For the last four years, we have waited for measures to be announced by the government to boost manufacturing, but they speak ‘Make in India’, but actually encourage import and sell in India.”

“The installed manufacturing capacity is lying idle, and many manufacturers are converting into traders, and realigning their business strategy as importers/marketers after resigning to lack of government support, and facing discrimination at even government-owned hospitals. Even basic consumables like thermometers, hot water bottles, disposable syringes, and needles are being imported and sold as Indian brands. We are encouraging pseudo manufacturing,” he added.

According to AIMeD, the medical devices industry has doubled to over Rs 60,000 crore in 2016-17 from Rs 31,900 crore in 2013-14 with nearly 80% being imported.

Domestic companies are finding it difficult to procure the government tenders with this huge influx of imports and are reeling under the threat of Chinese manufacturers who are dumping products at 30-40% cheaper rates than indigenously-produced products.

A recent report in TOI further states that Finance ministry is moving to reverse the hike on the customs duty on medical devices that was increased by the minister in the budget 2018 to encourage the domestic industry,

A source told TOI that the notification issued by the finance ministry on Friday has quashed the customs duties on two categories of medical devices that were increased to 7.5% and 10% from 5% and 7.5% which leads the domestic industry in a panic situation.