Budget 2024: MTaI seeks lowering of customs duty, removal of health cess on medical devices

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The Medical Technology Association of India on January 17 sought the lowering of customs duty to 2.5 percent and the removal of health cess ad valorem on medical devices in the upcoming Union Budget.

The industry body, which represents leading research-based medical technology companies with large footprint in manufacturing and training in India, also sought expansion in the coverage of government health insurance schemes to include daycare surgeries.

"It is heartening to see that the government has placed affordability as one of its top priorities. However, the 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; this is therefore contradictory to what the government is trying to achieve," Medical Technology Association of India (MTaI) Chairman Pavan Choudary said.

As per government data, more than 80 percent of critical medical devices are imported into India to meet the rising demand for quality healthcare, he noted.

"We hope that as the preparation for the Union Budget 2024 gets underway, a correction on the tariff rates is urgently being considered," Choudary said. Currently, basic customs duty on medical devices ranges between 7.5 percent and 10 percent, and with the addition of other elements, it ranges between 27 percent and 45 percent.

"High taxation in the form of customs duty, and health cess, coupled with GST is detrimental to the interest of the patient as well as the industry. We believe customs duty rates should be lowered to 2.5 percent for all medical devices," MTaI Director Sanjay Bhutani said. At present, India imports around 80 percent of medical equipment required for various processes from countries like the US, Germany, and Japan.

"The rise in imports in India is primarily on account of the increasing demand for medical devices on the back of the rising population coupled with an increase in lifespan and lifestyle-related diseases," Bhutani said. He noted that if the duty rates go down, the growth rate of FDI by medical technology firms could potentially double in the next few years.

In 2022, the FDI in the Indian medical technology segment stood at $407 million. It increased to $464 million in the January-September period of the last year. As per the industry estimates, the size of the medtech sector in India is around $12 billion and is expected to touch $50 billion by 2030.