Medical Technology body pitches for cut in customs duty

Lower duty to help prevent smuggling of medical devices, reduce healthcare cost

New Delhi: Medical Technology Association of India on Wednesday urged the government to lower customs duty on import of medical devices that would help reduce cost of healthcare services in the country and prevent smuggling.

In its pre-budget recommendation submitted to the Finance Ministry ahead of the presentation of Union Budget 2024-25, the association has suggested to bring down basic customs duty on import of medical devices to 2.5 per cent from the current range of 7.5 per cent to 10 per cent.

Director of Medical Technology Association of India (MtaI) Sanjay Bhutani said the effective rate of taxes on the sale of imported medical devices in India is in the range of 27 to 44 per cent, which is among the highest in the world.

Apart from the basic customs duty, medical devices also attract taxes like ad valorem, health and education cess and goods and services tax (GST). Ad valorem tax is levied at a rate of 5 per cent, higher education cess 1 per cent and GST is 12-18 per cent.

“This burden is ultimately passed on to the patients. This is reflected in higher cost of medical services,” said Bhutani, who is also Managing Director of Bausch & Lomb, one of the leading suppliers of contact lenses and lens care products.

Bhutani said taxes on medical devices in India are among the highest in the world. There is no customs duty on import of medical devices in countries like Singapore, Hong Kong, Italy and Norway, while Australia and Japan levy just 0.5% duty. In the United States it stands at 2 per cent and in China 3 per cent.

According to Pavan Choudary, Chairman Medical Technology Association of India, a large number of medical devices are imported illegally in India to avoid taxes. “Such products don’t get proper service and thus pose risks to patients. Moreover, it’s a loss to the exchequer as no taxes are paid if the products are smuggled,” he said.

Choudary underlined that more than 80 per cent of critical medical devices used in India are imported. “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,” said Choudary, who is also Managing Director of Vygon India.

He further added that lower custom duties mean lower costs which would allow access to modern equipment for patients and encourage companies to bring the latest devices to market.