Over the past decade, the industry has shifted focus from the traditionally lucrative developed markets to the more promising emerging markets. A noteworthy portion of organic activities of the companies are channeled towards building resources, both capacity and people, to expand their customer base in these high growth markets. The expansion of these emerging economies, government funding and reforms, changing consumer lifestyles, increasing penetration of medical insurance products, and a rise in awareness and disposable income, has increased the demand for quality healthcare services. This, in turn, is expected to increase the demand for medical equipment and other support services. Today, the medical devices market in the BRIC countries, alone, accounts for nearly USD 10Bn and is growing at an average CAGR of 8%. Also, The India's healthcare infrastructure is lagging behind when compared with other developing countries. There exists a huge gap between demand and supply of healthcare infrastructure facilities available in the country.
The Creation of exclusive dedicated Medical Technology Parks where there is a cluster of manufacturers of Medical Technology products with basic infrastructure to support these and the inclusion of benefits for Customs duty on raw material, excise duty concessions, VAT holidays, IT holidays, etc. Furthermore, there is a need for R&D grants / subsidies in the Medical Technology space for promoting Domestic Innovation initiatives.
To ensure that there is thrust in the Research and Development area for design as well as innovation of these products, special incentives must be offered to get more participants in this. As benefits to the society would be very significant due to such projects, incentives in the form of Income Tax write-off for up to 250% of the value of investment for R & D and innovation of Medical Instruments, Diagnostics Instruments, Consumables, Devices, etc. should be offered.
Customs Duty
Exemption for Medical / Dental / Surgical Equipments
Special CVD 4% in lieu of VAT
For any product that is meant for retail sale, MRP is required to be declared at the point of import. Further, 4% Special CVD is not levied on products that carry MRP at the time of import. This causes peculiar complications for the industry. The industry has tens of thousands of SKUs that are imported. It is not possible to forecast accurately and get products manufactured that carry India specific labeling and within the required time and cost. As a result, products are bonded with customs; MRP labels are affixed and then released. This is a logistical nightmare and adds to the cost of import. It is requested that a provision to be made to exempt Medical Products falling carrying an MRP sticker at the time of import and permission be granted to importers to affix MRP stickers post importation at their own warehouses
Other Customs Exemptions
Excise Duty Recommendations
Service Tax Recommendations
Scrip’s to Watch:
Optocircuits
Analyst Expectations/Outlook:
We expect exemption of custom duty on few life saving medical devices, consumables used with devices in the specific life saving treatment procedure and their spare parts. Also, Custom duty on import of finished goods and raw materials/components expected to be lowered. Some reduction in excise duty on medical equipments will benefit the industry.