The government's decision to hike duty on imported medical devices, re-impose SAD on such imports, and reduce taxes on raw material imports will bring an end to a discriminatory taxation regime against domestically manufactured goods.
The ministry of finance has increased customs duty on medical devices from 5 to 7.5 percent, and an SAD of 4 percent has been reimposed. The ministry has also limited concessional duty applicability to only 12 essential medical devices as opposed to a large number of Chapter 90 items that were enjoying this benefit. In addition, import duty on raw materials for manufacture of medical devices has also been reduced.
While the magazine is going into print, expectations are that the Union Budget 2016-17 will also provide some impetus to the MedTech industry.
As demand for healthcare continues to outpace supply, continuous effort to bridge the gap is being made by the government and the private sector.
February 2016 saw some major announcements. The government has started the process of establishing 17 new AIIMS (amounting to 16,300 beds), 20 cancer institutes, and 50 tertiary cancer care centers. Super speciality blocks are being set up in 70 medical colleges and 58 district hospitals are being upgraded to medical colleges. Six states have signed MoUs with Indo-UK Healthcare Private Limited to establish medical institutions in various districts. This is an attempt to fill up the requirement of doctors as per WHO norms.
AIIMS is procuring machinery and equipment worth Rs. 261.9 crore in the current financial year. Over 1000 tenders for procurement have been processed, and 600 tenders already finalized. An expenditure of Rs. 71.33 crore has been incurred against the allocation.
Reliance Industries Limited plans to build a hospital in Jamnagar district; Dubai-based Abraaj Group has acquired a 72 percent stake in CARE Hospitals for Rs. 2000 crore; and GPT Healthcare Pvt. Ltd., which operates the chain of ILS Hospitals in Kolkata, is set to open two more facilities in eastern India.
Regular investments as these shall ensure a 15 percent CAGR in the MedTech industry over the next 5 years.