AiMeD Warns GST Rejig could Hurt Competitiveness of Medical Devices

The association warned that proposals to alter this rate, either lowering it to 5% or raising it to 18%, carry significant risks.

The Association of Indian Medical Device Industry (AiMeD) has cautioned that proposed changes to the Goods and Services Tax (GST) on medical devices could threaten the competitiveness of domestic manufacturers if not calibrated carefully.

At present, most medical devices attract a 12% GST, while key inputs are taxed at 18%, creating what AiMeD describes as an inverted duty structure that places pressure on industry margins.

The association warned that proposals to alter this rate, either lowering it to 5% or raising it to 18%, carry significant risks.

“For equipment, electronics, reagents, and implants, reducing GST to 5% would enhance affordability and market reach. However, applying a 5% rate to low-margin consumables like syringes, catheters, and IV sets would worsen the inverted duty structure, increasing costs for Indian manufacturers and making imports cheaper,” said Rajiv Nath, Forum Coordinator, AiMeD. “Retaining 12% GST for most consumables while allowing 5% for high-value equipment is the most balanced approach.”

Nath further underlined that the implications go far beyond industry economics. “Raising GST to 18% would increase medical device costs for hospitals and households, while a flat 5% GST without refund reforms may create supply risks by discouraging local production. A calibrated structure is therefore essential to ensure both affordability for consumers and sustainability for Indian manufacturers.”

Industry representatives from the Indian Rubber Gloves Manufacturers Association (IRGMA) also flagged a sector-specific issue. They pointed out that nitrile gloves remain a special case, where manufacturers have sought 18% GST owing to very high input credit accumulation, low value addition, and the challenges of a highly price-sensitive, import-dominated market.

Alongside GST slab recommendations, AiMeD stressed the importance of streamlining the refund system. It urged that refunds on input services and capital goods be allowed to ease cash flow pressures.

“GST was designed to tax value addition without reducing competitiveness,” the association noted.

To address the widening price gap between imports and domestic products, AiMeD has proposed raising the Health Cess on imports from 5% to 10%, with the additional revenues channelled into Ayushman Bharat.

This would partially neutralize the cost advantage enjoyed by imports and help finance India’s flagship health insurance programme.

“With Indian manufacturers already facing ~15% cost disability against imports from China and ASEAN countries, GST policy must support Make in India, not disadvantage it,” Nath added. “A calibrated GST structure can simultaneously promote affordability for patients, protect consumer interests, strengthen domestic manufacturing, and align with the government’s vision of Atmanirbhar Bharat.”

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