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Panel asks govt to provide duty concessions, reduced GST rates for growth of medical devices manufacturing
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Gireesh Babu, New Delhi
January 13 , 2025
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A Parliamentary panel has sought the ministry of chemicals and fertilisers to facilitate attractive duty concessions and reasonable reduction in the Goods and Services Tax (GST) rates in consultation with other stakeholders to keep boosting the domestic manufacturing of medical devices.
The Parliamentary Standing Committee on Chemicals and Fertilisers, in its second report in the 18th Lok Sabha, analysing the action taken by the government on the observations and recommendations of the committee in their previous report (15th report of the 17th Lok Sabha) on Promotion of Medical Device Industry, observed that much has been done to boost domestic manufacturing of medical devices.
"...however, the Committee desires that the Ministry may device a mechanism to see to it that attractive duty concessions and reasonable reduction in the GST rates are effectuated in consultation with other stakeholders so that the momentum is not lost and the benefits of PMP are able to reach beyond the realms of a few medical devices," said the panel headed by Lok Sabha member Kirti Azad Jha.
It also sought the Ministry to keep it apprised of the status in this regard.
In its previous report, the Panel observed that the domestic manufacturing disabilities such as high GST rates (around 12% to 18 %) on domestically produced medical devices and low custom duty on imported finished medical devices in comparison to Basic Custom Duty on raw material, subparts, parts etc. that has created a vicious circle of high dependence on imported medical devices.
The Department of Revenue has, however, clarified that the reduction in GST rates creates an inverted duty structure and blockage of input tax credit.
It noted that the Department of Pharmaceuticals (DoP) has introduced Phased Manufacturing Programme (PMP), wherein the Department of Revenue has to increase the basic custom duty in a phased manner on the medical x-ray machines and specified sub-assemblies/parts/sub-parts. In addition, based on industry requests and sufficient domestic manufacturing capacity, the Department has also requested the Department of Revenue to increase Basic Custom Duty on 40 finished products to protect the interest of the domestic manufacturers.
Observing that the sector is at a nascent stage of development, the Panel in its previous report, recommended that it is necessary for the government to support the sector by reducing the GST rates for domestically produced medical devices and giving the domestic manufacturers attractive custom duty concessions on the import of electronic components, metal compounds, plastics resins, reagents etc. used for manufacturing medical devices as a short term measure till the time the industry does not attain self-sufficiency in the manufacturing of raw material, subparts, parts, etc.
It also recommended that the Phased Manufacturing Programme (PMP) may gradually be extended to other medical devices in a time-bound manner.
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