The Association of Indian Medical Device Industry (AiMeD) has cautioned that changes in Goods and Services Tax (GST) rates must be carefully managed to prevent disruption in the domestic medical devices sector. The industry has requested a transition period of 3–6 months if GST is reduced from 12% to 5%, to avoid supply chain and pricing challenges.
Currently, most devices attract 12% GST, while inputs are taxed at 18%, creating an inverted duty structure and margin pressure for manufacturers. AiMeD noted that reducing GST to 5% for equipment, electronics, reagents, and implants could enhance affordability and access, but applying 5% on low-margin consumables like syringes and catheters could worsen cost pressures, benefiting imports over domestic production.
AiMeD recommends retaining 12% GST on consumables while reducing it to 5% for high-value equipment as a balanced approach. It also emphasized the need for streamlined GST refunds, including refunds on input services and capital goods, to improve cash flow for manufacturers.
Industry voices also highlighted specific cases such as nitrile gloves, where manufacturers seek 18% GST to address high input credit accumulation and import-driven competition.
AiMeD further proposed raising the Health Cess on imports from 5% to 10%, with proceeds directed to Ayushman Bharat, as a way to counter cheaper imports and strengthen local manufacturing.
“With Indian manufacturers already facing a 15% cost disadvantage against imports from China and ASEAN nations, GST reforms must support Make in India while ensuring affordability for patients and consumers,” said Rajiv Nath, Forum Coordinator of AiMeD.