MSME dominated medical domestic manufacturing takes a hit post GST as imports become 11 per cent cheaper and shoot up 24 per cent. Imports of medical devices are up by record 24 per cent at Rs 7450 crore from Rs 31386 crore in 2017-2018 to Rs 38,837 crore in 2018-2019. As the market is barely growing at 10-12 per cent, overall the data of 24 per cent increase in imports indicates further erosion of 10-30 per cent domestic market share to 10 to 20 per cent market share stated a visibly upset Rajiv Nath, Forum Coordinator of AiMeD.
GST on medical devices is in favour of imports and is detrimental to Make in India. MSME sector has been worst hit with huge job losses. Rajiv Nath claim that after the GST on imported medical devices became cheaper by 11 per cent, the basic import tariff stands in the range of nil-to-7.5 per cent for most medical devices. Before the GST regime, imported medical devices attracted excise duty and special additional duty, over and above the import duty. After GST, only import duty and GST are levied. However, since one gets input credit in the GST regime, the effective taxation reduces, Nath explained. While the Modi government is touting the success of Make in India program, the beleaguered medical devices domestic industry is focusing on exports as they continue to lose market share to imports on account of lack of adequate tariff protection, lack of non-tariff import barriers and unfair unethical market that favors perceived higher quality of familiar MNC brands with attractive trade margins and higher MRP vs unfamiliar unknown new Indian brands which even if lower priced against European or American or Japanese brands, if not Chinese, do not adequately induce retailers and hospitals to push their products nor do they have the deep pockets to match the sales promotion, marketing budgets to sponsor events of celebrity doctors.