Industry body CII or Confederation of Indian Industry has called for a reduction in the import duty applicable to parts used in the manufacturing of medical equipment. In its Pre-Budget Memorandum, the trade body has also pitched for a reduction in import duty on intra ocular lenses (used in cataract surgery) from the existing 10 per cent to 5 per cent. "Medical device industry is the vital wheel of healthcare industry," CII said. Finance Minister Nirmala Sitharaman will present the Union Budget for financial year 2020-21 on February 1.
CII also said a high custom duty of 10 per cent is applicable on the import of intra ocular lenses, and an overall duty of 25.52 per cent (including GST) leading to higher healthcare service cost. "These lenses should continue to be charged at preferential custom duty rate of 5 per cent as was applicable back in 2015 Reduction of Custom duty on Sight Saving devices & Equipment & Devices," said CII.
Currently, an effective customs duty of 7.5 per cent is applicable on medical, surgical, dental and veterinary equipment, and 5 per cent on their parts and accessories. Different types of medical devices have a partial or full exemption under various entries in different notifications at present, which can be rationalised, according to the CII.
Also, partial exemptions are available for specific items imported or domestically procured by the research and development units registered with the Department of Scientific and Industrial Research (DSIR).
This exemption is granted over and above 5 per cent on such procurements but only on specified items, and full taxes/duty have to be paid for the items not in the specified list. This has increased the cost of R&D activities and resulted in a huge accumulation of GST input tax credits, according to the CII.
The trade body has suggested a full exemption of custom duty on all items procured by R&D units, which, it said, will go a long way in reducing their costs and ultimately the cost of the bulk drugs or dosage forms manufactured.