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Medical device industry looks for incentives in R&D, manufacturing hubs and duty reductions from Union budget
Our Bureau, Bengaluru | Saturday, July 5, 2014, 08:00 Hrs  [IST]

The medical device industry is now looking for a slew of incentives coming in from the Union Budget 2014, to be presented in Parliament by finance minister Arun Jaitley on July 10.

These include incentives in R&D, setting up of manufacturing hubs like the dedicated Medical Technology Parks with creation of clusters. It is also hoping that the government would rationalize the tax structure with the total exemption of customs duty for medical, dental and surgical implements.  Further it has also called for total waiver of tax for in-vitro diagnostics like antigens, antibodies used in test kits besides endovascular stents. It has called to fix a special countervailing duty of 4 per cent.

“The demand for quality healthcare in emerging markets has increased along with the size of the population, government funding and reforms, changing consumer lifestyles, an increasing penetration of medical insurance products, and a rise in awareness and disposable income,” said Dr. Vibhav Garg, vice-chairman,  AdvaMed’s India Working Group.  

The medical devices market in the BRIC countries accounts for nearly US$10 billion with an average CAGR of 8%.

Medical Technology Parks foster reduced customs duty on raw material, excise duty concessions, VAT holidays, IT holidays, etc.

According to Abby Pratt, vice president of AdvaMed, the medical device industry is suggesting that incentives in the form of Income Tax write-offs for up to 250 per cent of the value of investment for R & D and innovation of medical instruments, diagnostics instruments, consumables, devices, etc. should be offered.”

Tariff barrier on imports of finished goods impacts healthcare costs because economies of scale will not permit manufacturing of all products in the country. Therefore, import of finished goods and raw materials/components should be at low customs rates, she added.

All life saving medical devices, consumables used with devices in the specific life saving treatment procedure and their spare parts should be exempted from customs duty.  It is recommended that the patient monitoring systems & image guidance systems, pacemakers, image guided systems, external defibrillators, NT & ENT surgery products including electrical/pneumatic drills & the consumables, deep brain stimulation implanters, drug pumps, lead etc, heart lung machines & oxygenators - during cardiopulmonary, heart valves, annuloplasty rings and various cardiac catheters, respirators and masks (industrial & healthcare), dialysis machines equipments and devices (hemo and peritoneal dialysis) and peripheral vascular stents should be exempted from the levy.

The sterilizers of heading 8419 20 90 which are presently levied import duty at 25.85 per cent may be fully exempted from the levy of customs duties.  Topical skin adhesive presently levied to import duty at 19.567 per cent must be fully exempted. These devices are used for wound closure, instead of conventional sutures.

Medical stretchers/wheel chairs/medical beds should be levied to a concessional rate of basic customs duty of 5 per cent.  Integrated operation theatre (consisting of routers, booms, pendants, lights, monitors, camera, and connectors etc) should be charged to a reduced duty of 5 per cent basic and Nil CVD.

The industry has also recommended for reduction of excise duty on medical equipments and be prescribed at the lowest slab to enable the domestic industry to find a foothold.

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