After relaxing FDI policy for medical devices sector, the government is expected to announce an incentive package for medical devices sector, including tax benefits in the forthcoming Budget 2015-16 for domestic manufacturers.
In its pre-budget proposals, the Ministry of Commerce and Industry has suggested Union Finance Minister Arun Jaitley to increase import duty on medical devices product, including syringes and pacemaker.
It has recommended that the basic customs duty be hiked from 5 per cent to 10 per cent in the Budget 2015, to be presented on 28 February, said a source.
Currently, there is an issue of inverted duty structure on medical devices, which means customs duty on the final product is less than the duty on some raw materials essential for domestic manufacturing of syringes.
It is estimated that import of syringes has increased to $38.7 million in 2013-14 from $30.7 million in 2006-07. While, the domestic demand for the products is about 3 billion pieces.
Moreover, the ministry has also suggested that the countervailing duty on the imported raw material should be exempted on use basis for pacemakers.
According to sources, the Ministry wants that the existing concessional duty of 5 per cent on the imported raw material should be continued.
An industry expert said that there is a huge potential in this sector as the domestic demand of pacemakers is about 50,000 pieces. Its imports have increased to $22.86 million in 2013-14 from $14.22 million in 2006-07.
The government in last December permitted 100 per cent foreign direct investment (FDI) under automatic route in medical devices sector to encourage the manufacturing of equipment, including diagnostic kits and other devices.
India has achieved an eminent global position in Pharma sector. However, the same has not been replicated in the Medical Devices industry.