Medical Device Manufacturers Warn of Crisis, Seek Expedited GST Refunds and Freight Rate Regulation

Indian Medical Device Industry Seeks Government Relief Amid Raw Material and Logistics Crisis

The Association of Indian Medical Device Industry (AiMeD) has written to Piyush Goyal, commerce minister, and Arvind Shrivastava, revenue secretary, warning of a hospital supply crisis and seeking immediate fiscal and logistical relief from the government. The surge in raw material prices and the Strait of Hormuz blockade is squeezing margins, with the industry facing significant challenges in maintaining production and exports.

Key Concerns

• Raw Material Price Hikes: Prices of critical plastics have jumped nearly 50%, packaging and diesel-based self-generated power costs have climbed more than 20%, and PNG gas has nearly doubled since the Iran war.
• Inverted Duty Structure: Manufacturers are paying 18% GST on inputs while charging only 5% on finished devices, resulting in large accumulations of unutilized input tax credit and increased bank borrowings.
• Logistics Crisis: The sector is facing rising input costs, global shipping delays, and higher logistics costs, with Concor and Adani Gas being called upon to avoid opportunistic increases in inland freight charges and adjust supply caps, respectively.

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Proposed Solutions

• Fast Tracking of GST Refunds: AiMeD has asked the government to fast-track GST refunds to prevent opportunistic freight hikes and protect domestic manufacturers.
• Targeted Customs Rebate: A three-month customs rebate of 2.5% on raw material imports and 5% on component imports is proposed to restore stability.
• Avoid Reducing Import Duties: AiMeD warns against reducing import duties on finished medical devices, arguing it would severely disadvantage domestic manufacturers.

Industry Outlook

• Projected Growth: The Indian medical devices industry is valued at approximately $14-16 billion in 2025 and is projected to reach $50 billion by 2030.
• Import Dependency: India is heavily dependent on imports for high-end technology (80-85% import dependency), while exporting roughly $4.1 billion in devices in FY25 to over 187 countries.

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