A Section of domestic manufacturers are seeking policy intervention based on flawed data interpretation: MTaI

Facts highlight requirement of a cut in import duties, not a hike

Medical Technology Association of India, Medical technology, Domestic manufacturers, Imports, Medical devices

Medical Technology Association of India (MTaI), which represents leading research-based medical technology companies with large footprint in manufacturing, R&D and training in India, said the growth in imports of medical devices is being purposely exaggerated by a section of the domestic manufacturers to suit their agenda of seeking a hike in customs duty.

“Besides repeatedly publicising hazy data that can skew the narrative, fictitious figures are being presented as facts,” MTaI chairman & director general and Vygon India managing director, Pavan Choudary said.

He added that a section of domestic manufacturers is presenting imports value of 2018-19 as being 25% higher than the previous year, alleged MTaI. “The numbers are being presented in rupee terms, which is an erroneous measure as the value of rupee has depreciated sharply and therefore it does not present the correct picture. During the fiscal 2018-19, there was a sharp decline in INR to the extent of about 15% at its peak and if a full year’s average is considered, the rupee depreciated by 8.5% in fiscal 2018-19 over previous fiscal. Therefore, data in rupee terms is not comparable because of the effect of depreciating currency. One has to study the figures in US Dollar to deduce a logical conclusion.”

  2017-18  2018-19 Growth
Import value  (in INR)        1,000         1,100  10%
1 USD Vs INR        65.31         70.82  
Import value (In US$ )        15.31         15.53  1.44%

He added, “A look at the import data from Export-Import Data Bank on Department of Commerce’s website makes things amply clear. Imports under chapter 90 that contains all medical devices, grew 19.82% in 2018-19 from a year earlier when expressed in rupee terms. However, the corresponding growth in US$ terms was only 10.45%.”

The section of domestic manufacturers claim that before implementation of GST, imports of medical devices attracted 18.5% taxes (including 7.5% customs duty, 6% countervailing duty and 4% special additional duties) and that after GST only 0-7.5% taxes are being paid by importers.

“The fact is after the GST regime, importers have to pay respective customs duty which is around 7.5%-10% in addition to 12% of GST. So in effect, importers are paying more taxes after GST regime than before. It is true that the input tax credit is applicable against GST component on inputs, but the same is available for locally manufactured goods as well. In total, GST regime does not benefit importers in any way over domestic players. In fact, post-GST import duties on many implantable devices have gone up to 10% due to increase in custom duties,” said MTaI Director and Bausch and Lomb MD Mr. Sanjay Bhutani.

Considering these facts, the demand of a section of domestic manufacturers to increase customs duties on imported medical devices based on inexact interpretation of government data is specious. Pavan Choudary adds, “The saving grace is that such unrefined interpretations are not succeeding in distorting policy formulation. In fact, we are glad that the current government has for the first time constituted a National Medical Device Promotion Council to boost manufacturing, attract investments and promote exports. We hope this body will peer deep in to facts and come up with an irrefutable diagnosis and well considered prescriptions to catalyse make in India in patient and country interests.”