KT Rama Rao writes to Piyush Goyal to slash GST on medical devices

Industries Minister KT Rama Rao on Tuesday wrote to the union government to slash the GST on medical devices to 12 percent and on diagnostics to 5 per cent as against the existing 18 percent, and to introduce schemes to promote component manufacturing in India. He also stressed on the need to incentivize companies by raising import duties in phases under a Phased Manufacturing Programme (PMP) as was being done for mobiles and X-Ray machines.

Suggesting measures for strengthening the medical devices industry in the country, the Minister wrote to union Minister for Commerce and Industry Piyush Goyal, raising key issues faced by the industry.

“The Telangana government is willing to partner with the union government to set up a Medical Imaging Hub with advanced equipment and machinery in the Medical Devices Park, Hyderabad to promote industry to manufacture these components,” Rama Rao said, pointing out that there was a need to ramp up testing facilities within the country as the number of labs for testing medical devices was inadequate for an industry that is growing at more than 15 per cent CAGR.

The existing facilities were ill-equipped and did not always have the necessary accreditation by National Accreditation Board for Testing and Calibration Laboratories (NABL) or notified and empaneled by Central Drugs Standard Control Organisation (CDSCO) and manufacturers did not have access to availability of blood and tissue samples. The waiting time and charges at the existing facilities were also long and high.

Rama Rao urged the union government to consider drafting of a legislation for quality testing labs in India, incentivize labs that were accredited and encourage setting up more testing facilities with advanced equipment to ensure Public Procurement is encouraged on basis of CDSCO registration or Manufacturing License and Indian Certification of Medical devices accredited by National Accreditation Board for Certification Bodies (NABCB).

Stating that the 20th anniversary edition of BioAsia concluded successfully in February



this year, the Minister informed that a roundtable meeting on medical devices was conducted as part of the event, during which Chief Executive Officers and association representatives raised their concerns and suggested effective measures useful to the medical devices industry. 

Citing the concerns raised, the Minister said currently, in addition to the custom duty, even GST on spare parts of medical equipment was charged at a higher rate than the equipment cost, which adversely impacts the costs of medical devices in the country. Medical devices were not luxury items and it was extremely important to recognize that devices or diagnostics would be critical to make healthcare accessible for all, he said.

“I urge the union government to review and reduce GST on medical devices to the extent of 12 percent and on diagnostics to the extent of 5 per cent as against 18 percent currently levied,” Rama Rao said.

“ The Telangana government is also willing to partner with the union government to set up additional testing labs in Hyderabad to cater to the pan India demand,” he said, also requesting the Centre to consider streamlining of approvals for domestically manufactured medical consumables, which are generic versions of international products that are being sold for several years.

In terms of size, the Indian market is among the top 20 in the world and fourth largest in Asia after Japan, China and South Korea. It was a good opportunity as the industry is growing at more than 15 percent CAGR, he said.

It was high time that the union government reviewed and corrected inverted import duty structures and barriers to manufacture in India to encourage ‘Make in India’ to reduce import dependence,” he said.

Regarding the constant challenges with availability of raw material in the medical device industry, the Minister said that the industry places bulk orders abroad, which usually takes 6 to 12 months to deliver and then stocking was also a huge challenge.