High hopes for the medical device industry, Health News, ET HealthWorld
The MedTech industry through its perseverance and sustained determination throughout the roller coaster in 2021. During much of the pandemic in the absence of a proven vaccine, it was the MedTech industry that assumed the fight against the pandemic. Even when things got complicated due to the COVID-induced global shutdowns/curfews and the plethora of challenges they brought, the MedTech industry ensured that the supply of life-saving medical devices and equipment continues uninterrupted. He overcame labor shortages, logistical nightmares and financial difficulties such as escalating freight and raw material costs; many segments have been suffocated by restrictions on elective procedures that have crippled their results.
The MedTech sector has seen a steady recovery over the past few months after being heavily impacted for most of 2021. The sector hopes it can sustain the recovery and expects the government to ease some of the burdens on the MedTech industry , which are remarkably long. There are a few key areas that will be of particular interest to the medical device industry when the budget is presented on February 1.
The government has already sought to improve healthcare affordability in India and extend healthcare benefits to as many people as possible through the AB-PMJAY or Ayushman Bharat scheme. However, a number of current policies such as high tariffs, extra healthcare charges, un-streamlined tax regime, high GST and possibly exempt categorization of hospitals are significantly increasing the healthcare costs in India, this which is contrary to the objectives set by the government. . These obstacles must be addressed as a priority.
India has one of the highest tariff rates for medical devices in Asia and even the world, which has a huge impact on affordability, especially when we are dependent on 85-90% of importing a critical mass of medical devices. The industry is demanding that tariffs on medical devices and equipment be reduced to 0-2.5%, as in many other countries. Moreover, since the tariff regime on most medical devices in the neighboring countries of Nepal, Bangladesh, Sri Lanka and Bhutan is significantly lower than in India, the tariff differential could lead to smuggling of low-volume, high-value devices. The result will not only be lost revenue for the government, but also the patient plagued by products that are not backed by adequate legal and service guarantees.
The country also needs accelerated development of health infrastructure as the current ratio of hospital beds is 1.3 per 1,000 patients, which is very low compared to the WHO recommendation to have 3.5 beds per 1,000 patients. The healthcare ecosystem is also calling for measures to expand insurance coverage due to the fact that out-of-pocket healthcare expenditure constitutes a very high share of total healthcare expenditure in India at around 65%.
The emerging regulatory pathway for medical devices and equipment also needs to be further reassured by best practices in materiovigilance.
Below is MTaI’s agenda for the Union Budget 2022-23:
Reduction of customs duties on medical devices. Also reduced duties on critical components that are essential for manufacturing reliable medical cold chain units.
Modification of the ad valorem taxation of Cess Santé if not removed all together, as this has been made applicable only to the healthcare industry and is an additional burden. The modification can be done by deleting the word ‘Ad-valorem’ so that the tax is only applied at the basic customs duty (BCD) rate.
Reduction of GST on medical devices and the medical cold chain from 12% to 5% – This will support the expansion of the healthcare sector through cost reduction and improved patient accessibility.
Rationalization of customs duties and GST on spare parts: Customs duties and GST on spare parts of medical equipment are currently charged at a higher rate than the equipment itself, these need to be streamlined.
Abatement of the calculation of the tax on CSR expenses: Expenditure on CSR is currently excluded from tax calculations. CSR expenses have been mandated by law and should therefore be claimed as tax-deductible expenses.
Tax holiday for medical device research and development centers: A tax exemption under the transfer pricing law should be provided to stimulate investment in the establishment of in-house R&D capabilities.
Improving the Indian medical device market (which currently represents only 1.6% of the global market) by meeting the targets set in the National Infrastructure Pipeline 2020, to build 73 new medical schools to increase domestic consumption and improve health infrastructure. The government needs to increase overall spending from the current 2.5% of GDP to around 5-6% as a first step to compare with emerging markets spending around 6-9% of GDP and developed world spending above 10% of GDP. GDP on health care.
Creation of budget provisions for training and development– the skills of health care workers (HCW) at all levels – primary, secondary and tertiary. This will help create a pool of qualified human resources ready to be deployed in an emergency and develop a strong and effective referral system. It will also reinforce the efforts of the private sector which is already pushing this program (MtaI companies alone train more than 2.5 Lakh HCW per year and prepare them for patients.
Creation of budgetary provisions strengthen the materiovigilance program in terms of increasing the number of centers and manpower to ensure public health safety by being vigilant on the market of available medical devices and by supporting MSMEs in the MedTech sector to manufacture quality devices.
Health services should be zero-rated– Currently, health care services are exempt from the GST, which prevents it from deducting the integrated tax from the outgoing tax. Instead of being classified under exempt, health services should be classified under entry
Sanjay Bhutani, Managing Director, India and SAARC of Bausch & Lomb
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