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AiMeD proposes MRP cap instead of GST exemption on med devices

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Terms GST exemption ‘counterproductive and anti Make in India’

The Association of Indian Medical Device Industry (AiMeD) has opposed GST exemption on medical devices as it is counterproductive and anti Make in India.

The association has suggested that if tax authorities want to protect consumers interest, then capping of MRP to 2-3 times over import landed CIF price or ex – factory prices for domestic manufacturers would be more impactful and result in immediate direct benefits. Nath alleged that in many cases the MRP is artificially inflated 10-20 times of import landed price in a skewed marketplace and the price of such medical devices could fall by over 50 per cent.

As per a statement from the association, Rajiv Nath, Forum Coordinator, AiMeD, has written a letter to Nirmala Sitharaman, Chairperson, GST Council of India & Hon’ble Minister of Finance requesting that  medical devices used for COVID-19 prevention and treatment like hand sanitisers, face masks, PPE kits, oximeters, ventilators, etc. should not be fully exempted from GST levy.

Otherwise, cost of manufacturing of these items will be increased to the extent of any GST (input tax) paid on purchases of the raw materials and services for the furtherance of the business, as input tax credit (ITC) is not available against exempted supplies and makes the domestic product more expensive and less competitive against imports.

For 40 medical devices listed with a GST rate of 18 per cent (e.g. thermometers, hot water bottles, laboratory instruments) needs to be reduced to 12 per cent as these are not luxury goods but needed for healthcare.

As per the statement, AiMeD is opposed to a call by importers and health care providers lobby seeking full exemption of GST for COVID related medical devices terming it “counterproductive and anti Make in India” as Indian manufacturers would need to increase ex factory prices as they would be unable to set off GST paid on input procurement to their outputs sales.

Imports on the other hand would become 12 per cent cheaper. Historically no importers had provided evidence that they reduced the MRP when GST or excise duty as earlier on their products was reduced.

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