Levelling the field for medical device manufacturing in India
10-Dec-14, ValueNotes
The fast growing medical devices market in India is ridden with tax & regulatory anomalies and malpractices. These are expected to be addressed soon.
The Association of Indian Medical Device Industry (AIMED) is optimistic that the Drugs and Cosmetics (Amendment) Bill, 2014, which is expected to be introduced (and passed) in the current parliament session, will facilitate creation of a level playing field for the Indian manufacturers of medical devices. The earlier avatar of the bill was shelved by the government as industry participants had raised several concerns and objections. While medical devices were earlier classified under a broad definition of drugs, the new bill provides a separate set of standards and regulations for them.
The impending legislation along with talks of raising the FDI limit in medical devices has raised hopes that the various anomalies in the current regulation of the medical devices industry in India will be removed in the near future.
A key aberration relates to import duties. Import duties on medical devices are lower than those on the raw materials that go into making of the medical devices. Additionally, while there is no VAT levied on imported devices, domestic manufacture attracts excise duty as well as VAT. Further, for the same finished medical device, the import duty is less than the excise duty on domestically manufactured product.