New Delhi, January 11, 2023: Medical Technology Association of India (MTaI), which represents leading research-based medical technology companies with large footprint in manufacturing and training in India, today said that the industry expects the government to address the pending list of asks in the upcoming Union Budget 2023.
During the previous year, the MedTech industry saw several new reforms which aim to take India’s regulatory mechanism on par with the best global systems available. Schemes like PLI introduced by Department of pharmaceuticals as well as creation of medical parks across the country underscored the intent of the Modi government to take the country’s Medical Device sector to the next level. Several efforts have also been undertaken to reduce compliance burdens which will go a long way in reassuring investors and attract FDI in the sector as already evident from the first three quarters of 2022. (Chart given below for reference).
MTaI Chairman and Director General, Mr. Pavan Choudary said, “As per government data, nearly 80% of medical devices are imported into India to meet the rising demand for quality healthcare. Meanwhile, the custom 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 and is contradictory to what the government is trying to achieve. As the preparation for the Union Budget 2023 gets underway, we expect a correction on the same.”
“The MedTech industry expected more from the previous Union budget than it yielded. The sector requires more focus in government outlays to ensure organic growth of the industry and realize its true potential. One way to achieve this is by increasing the public health spending to meet the current gaps in healthcare demand and supply. A separate budget should also be allocated for the promotion and marketing of the medical device sector globally” added Choudary.
The issues which need to be addressed in the budget this year are stated in detail below:
1.Reduction of High customs duties to 2.5% on medical devices: For products where the ability to import-substitute is still some time away; the high customs duty should be reduced. The high customs duty has adversely impacted the costs for medical devices in India which contradicts the government’s efforts to provide low-cost healthcare available to masses through various healthcare schemes.
Additionally, since the custom duty regime on most of the medical devices in many neighboring countries is lower than in India, the difference in duties created could lead to the smuggling of the low-bulk-high-value devices. The result will not only be loss of revenue for the government but also the patient will be beset with products which are not backed by adequate legal service guarantees.
- Removal of Healthcess ad valorem: The 5% healthcess ad valorem imposed on imported medical devices has further compounded the burden on the industry. For a country that relies heavily on imports to meet its healthcare needs, an additional tax threatens to not only dent the access to advanced medical equipment coming to India but will also leave patients bearing the brunt of these additional costs adding to the inflationary spiral.
- Allocation of a separate budget for the promotion of Medical Device industry: A separate budget of up to USD 5 Million needs to be allocated for the promotion, advertising and marketing of the Indian medical device industry globally. This will help strengthen ‘brand India’ and get greater acceptability of India-made medical devices in overseas markets which will further the governments vision of ‘Make in India for the world’. It will also help in the promotion of India as destination of manufacturing and R&D in MedTech.
- Increase public health spending to meet healthcare demand-supply gap: India currently has only 1.3 hospital beds per 1,000 population. An additional 3 million beds will be needed for India to achieve the target of 3 beds per 1,000 people by 2025. A similar gap exists in the availability of treatment services, as up to 60% of health facilities are concentrated in a handful of large cities across the country. Therefore, there is a need for focussed increase in public spending on health infrastructure especially in Tier 2, Tier 3 cities and rural areas.
- Incentivizing Skilling initiatives to bridge skill gap: At present, there is an acute shortage of skilled healthcare workers, with 0.65 physicians per 1,000 people (the WHO standard is 1 per 1,000 people) and 1.3 nurses per 1,000 people. It is estimated that another 1.54 million doctors and 2.4 million nurses will be required to meet the growing demand for quality healthcare in India due to initiatives like Ayushman Bharat (PM-JAY). To meet this demand, the private sector can be encouraged to take-up workforce skilling activities along with NSDC or HSSC for which tax incentives can be provided. (MTaI members already train more than 2 lakh HCWs annually across the country).
- Exemption of free medical device samples from TDS: The guidelines which were issued in June 2022 regarding section 194R of IT Act meant that even free samples of medical devices would come under TDS regime. The product samples provided by medical device companies to clinicians, enable them to get hands-on training to learn the optimum usage, application and handling of the product and sometimes to even demonstrate to the patients on how the procedure will be carried through. These samples are always marked “Physicians Sample not for sale” as per the D&C Act and Medical Devices Rules 2017 and are not to be used to generate any income. Therefore, any taxation on samples will prohibit these activities and hinder the doctor’s ability to deliver optimal patient outcome.
- Increase tax exemption and benefits for patients: As the prevalence of NCD’s like heart diseases, stroke, diabetes and respiratory diseases is continually rising and is estimated to comprise 75% of the India’s disease burden by 2050, therefore to enable timely treatment, preventive health checkups should be encouraged by increasing tax exemption limit from Rs 5000 to Rs 15000. Additionally, the deduction limit towards payment of medical insurance premium under section 80D should be increased from Rs. 25,000 to Rs. 50,000.
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