Budget 2017: MTaI seeks roll-back of custom duty hike

Assurance of predictable policy, will benefit the cause of Make in India rather than custom duty increase, mentioned the Medical Technology Association of India (MTaI) in a statement issued on January 25, 2017

Image for representational purpose only.

New Delhi: As per the statement issued by the Medical Technology Association of India (MTaI), the import duties on medical devices and equipment have already been increased almost across the board by 7.3 percent in January 2016. Since most of the items affected were falling in the 11.6 percent range which has gone to 18.9 percent now, it means an effective duty increase of 62.7 percent.

“For products where the ability to import substitute is still far away, the high custom duties should be rolled back. Such custom duty increases, which are almost fully passed on to patients, will only tax the patients further due to increase in cost of treatment,” Pavan Choudary, Director General, MTaI said.

“Moreover, since the custom duty regime in the neighbouring countries (Nepal, Bangladesh, Sri Lanka, Bhutan, Pakistan, Maldives & China) is now much lower than in India, the differential in duties created is likely to lead to the smuggling of many of the low-bulk-high-value devices. As that happens, not only will the Government lose revenue but also the patient will be beset with products without adequate legal & service guarantees,” he added.

MTaI statement further mentioned that there is an urgent need to do the micro analysis of the sub-sectors to know the requirements. “Wherever import substitution of an acceptable quality level is not on the anvil, a duty roll back to previous levels should be made. Where such substitution can happen, the duties can be kept at the levels where they are, since they have had a disproportionately high climb last year, and these can be then gradually increased after a couple of years provided the duty level does not go way beyond what is there in neighboring countries and if quality deficient manufacture doesn’t find their way in to the market. In the absence of any immediate remedy, we will clearly find mortality traps gaping at us,” it said.

Association believes that the process of incentivization (including lowest possible tariffs on raw material & components), research & development, skill development, greater health expenditure or better insurance coverage, low regulatory costs, assurance of predictable policy, will benefit the cause of Make in India rather than custom duty increase.