India’s medical devices sector is growing at a fast pace but remains turbulent with the recent reforms in India’s healthcare GST. The government’s decision to reorganize the GST health tax framework for medical products, especially medical devices, has raised alarm from manufacturers, hospitals, and patients. With slabs from 5% GST on medical devices to 12% GST on medical devices,
the stakeholders worry that increased costs could make it difficult for millions of Indians to access. This blog examines the obstacles, risks, and potential solutions to ensure cost-effective healthcare and foster the development of medical device companies in India.
Why the GST Overhaul Matters in India
- The effect of GST on healthcare is greater in India compared to most other nations because of the large proportion of out-of-pocket spending.
- The medical devices market in India is worth USD 12–13 billion and estimated to reach USD 50 billion by 2030 (IBEF).
- Even with this growth, more than 70% of devices continue to be imported.
- Out-of-pocket health costs push approximately 55 million Indians into poverty each year (World Bank, 2022).
- Stents, insulin pumps, ventilators, and syringes are stuck between several GST slabs.
- The AIMED GST overhaul advisory points out that in the absence of a rationalized framework, affordability will deteriorate further, particularly for rural and semi-urban patients.
Causes & Risk Factors
- The difficulties surrounding GST for the Indian medical devices market are due to a combination of policy and structural reasons:
- Several Slabs of GST: Devices come under 5%, 12%, and even 18% GST slabs, leading to confusion and inconsistent pricing.
- Dependence on Imports: Almost 80% of devices like MRI machines, CT scanners, and surgical robots are imported, accelerating cost inflation with each tax change.
- Weak Domestic Ecosystem: Despite the medical device policy India, local R\&D and manufacturing remain limited due to high compliance and capital costs.
- Hospital Markups: Hospitals often pass GST costs to patients, making treatment unaffordable.
- Uneven Policy Clarity: Lack of standard definitions for “essential” devices leads to arbitrary classification in tax brackets.
Impacts on Health
- The healthcare impact of GST can already be seen in India, especially for low-income households and patients residing in rural areas.
- Higher Treatment Charges: A 12% GST charge on surgical instruments or implants raises total procedure costs by several thousands of rupees.
- Urban-Rural Divide Increased: While private metro hospital costs might be absorbed, rural patients are burdened with increased charges without the cover of insurance.
- Delayed Treatment: Patients tend to delay or forgo critical procedures such as cataract operations or knee replacements because of higher costs.
- Burden on Public Hospitals: State hospitals with tight budgets find it difficult to bear the higher GST on purchases, impacting the availability of supplies.
- India already spends less than 2% of its GDP on healthcare, as stated by ICMR. The new GST structure threatens to further deteriorate affordability and accessibility in a nation where 65% of the population depends on out-of-pocket expenditure.
Solutions & Prevention Strategies
To make GST reforms balanced, policymakers and industry groups suggest various measures:
- Single 5% GST Slab for Essential Devices: Making all life-saving and widely used devices come under 5% GST medical devices will enhance affordability.
- Phased Transition for Non-Essential Devices: Cosmetic or luxury devices can have 12% GST medical devices, but with transparent classification.
- Encourage Local Manufacturing: Granting tax credits and simplified compliance under the medical device policy, India can minimize import dependence.
- Hospital Price Transparency: Regulations to prevent hospitals from overcharging patients in the name of GST.
- Public-Private Partnerships: Subsidized devices in rural areas to fill access gaps.
Also read :
Expert Views & Govt. Guidelines
Trade bodies such as AIMED (Association of Indian Medical Device Industry) have pushed the government towards implementing a balanced 5–12% GST regime.
- Role of NITI Aayog: It promotes domestic manufacturing via the “Make in India” initiative to cut imports.
- WHO Guidelines: Emphasize that affordability is paramount for universal coverage of healthcare.
- Medical Device Policy India (2023): Rolled out to position India as a medical device hub globally but still pending GST alignment.
- Finance Ministry Reviews: Presently reviewing inputs from AIMED and industry experts to take into account revisions.
Frequently asked questions
1. What is the GST rate on medical devices in India?
Medical devices come under more than one slab—5% GST medical devices for basic devices, and 12% GST medical devices for the rest. Some devices even come under 18%.
2. How does GST impact healthcare in India?
GST raises the price of devices, and therefore treatments such as surgeries, diagnostics, and therapies become pricier, particularly in private hospitals.
3. What is AIMED’s position on GST reforms?
AIMED is promoting a rationalized 5–12% GST tax structure for healthcare, making it affordable for patients without compromising government revenue.
4. How are imported devices taxed?
Imported devices are taxed with customs duty and GST, increasing their costs significantly because India is so dependent on imports.
5. What role does the medical device policy India play?
It tries to increase local manufacturing, lower dependence on imports, and provide a stable regulatory system for medical device companies in India.
6. What medical devices are below 5% GST?
Routine consumables such as syringes, needles, and certain diagnostic kits fall under 5% GST medical devices.
Conclusion
The current GST overhaul in India’s medical devices sector serves to underscore the fragile interplay between government finance and patient affordability. Though reforms seek to simplify taxation, disproportionate slabs threaten to exacerbate health inequality. A uniform GST structure, better support for domestic manufacturers, and transparent hospital pricing are essential to ensure India’s healthcare remains accessible. For sustainable growth, the country must focus on strengthening medical device companies in India while keeping patients at the center of all healthcare GST reforms in India.
Meta Description: Find out how GST tax reforms influence India’s medical devices sector, patient expenses, and healthcare accessibility under the new 5% and 12% GST regime.
Reference :
Leave a Reply