India’s medical device industry has raised red flags over proposed changes to the Goods and Services Tax (GST) regime, warning that a blanket revision could undermine domestic manufacturing and tilt the market in favour of cheaper imports.
The Association of Indian Medical Device Industry (AiMeD) said that while reducing GST to 5% on high-value equipment like electronics and implants could improve affordability and market reach, applying the same rate to low-margin consumables such as syringes, catheters, and IV sets would worsen the inverted duty structure—where inputs are taxed at 18% and outputs at 5% or 12% leading to margin compression and supply risks.
“Retaining 12% GST for most consumables while allowing 5% for high-value equipment is the most balanced approach,” the Forum Coordinator at AiMeD said.
“A flat 5% GST without refund reforms may discourage local production and create supply risks,” he said.
AiMeD also cautioned that raising GST to 18% would increase costs for hospitals and households, hurting affordability. The association urged the government to streamline GST refunds, including on input services and capital goods, to ease cash flow pressures and improve competitiveness.
To counteract the pricing advantage of imports, AiMeD proposed increasing the Health Cess on imported devices from 5% to 10%, with proceeds earmarked for Ayushman Bharat. “Indian manufacturers already face a 15% cost disability against imports from China and ASEAN countries,” Nath said. “GST policy must support Make in India, not disadvantage it.”
The statement comes amid ongoing deliberations on GST rationalization, with industry stakeholders pushing for a calibrated structure that balances affordability for patients with sustainability for manufacturers.
