Budget 2017: Irrational EXIM duty regime dampens Make in India, says AIMED

In his comments on the pre budget expectations, Mr Rajiv Nath, Forum Coordinator, AIMeD mentioned that some good steps have already been taken but government needs to walk the entire mile to make real difference

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New Delhi: “Higher import duty on critical devices which can be made in India is not protectionism but sound economics and the preferred policy tool the world over to boost domestic industry and employment! Let us not shy away from this budget,” stated Mr Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD) in his budget expectation comments.

“The point we at AiMeD have been trying to make for a long time is that higher import duty on critical items which can be made in India is not protectionism but sound economics and the preferred policy tool the world over to boost domestic industry and employment! Let us not shy away from this – this budget! And we have already seen the beneficial impact of such steps in sectors like telecom,” said Mr Nath.

“One year ago, to give a boost to domestic manufacturing of mobile handset and components, Government imposed a differential duty of 10-12.5 %. What happened? Every imported brand stepped forward to put a factory in India – whether Chinese or Taiwanese or American including Apple, though it’s trying to negotiate some concessions”

For medical devices, AiMeD has consistently been advocating a nominal duty cover of 10% for those items where exports are over Rs 5 crore – ensuring availability of international quality products and 7.5% for below this to enable ‘Make in India’, otherwise we will keep playing the chicken and egg game – no businessman will invest in this line if it’s not profitable to manufacture in India and existing manufacturers will resort to imports to expand their range if it’s not viable to Make in India.

“Some good steps have already been taken but the government needs to walk the entire mile to make real difference, said Mr Nath who added, “On Jan 19th, 2016 last year, Government withdrew duty concessions on 78 medical devices, thereby increasing Basic Duty by 2.5 % to 7.5% and reinstated the Special Additional Duty that had also been withdrawn to 4%. To address the problem of inverted duty structure where the imported raw materials had a higher duty the government kindly reduced this to 2.5% for these 78 items. While this was a much-needed step in right direction we need to do more to have impactful results.”

Specific expectations this budget in the words of Mr Nath

We are now hoping that the government will similarly consider the balance 21 Devices which are mainly Diagnostics Analysers and Electronics and Reagents and will similarly provide nominal protection of 7.5-10% duty as stated above. We are confident that like Telecom industry there will be a quick turnaround with this fiscal tariff support policy if continued.

To address the criticism that this will make Imports costly and unaffordable we have recommended that Government may consider to put a 1% Cess as Excise Duty on the MRP of the Devices payable by importers and manufacturers to act as a disincentive for keeping excessively high prices.

We have also recommended Government to ban import of second hand medical equipment and electronics even if Refurbished till such time we have a strong regulatory frame work to ensure patient safety by way of protection from Radiation or inaccurate results by validation, calibration and testing. Does Government allow import of second hand cars? No? If it will allow the huge investments that are in automotive sector will stop and car manufacturing will suffer. Our PM did not permit Apple to bring in pre-owned phones – so why allow for medical devices?

If government does not act on our suggestions then India will continue to be dominated by Imports of 70-90% and I am sure nobody wants that.