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Indian Medical Device Makers Warn GST Overhaul Could Undermine ‘Make in India’

The Association of Indian Medical Device Industry (AiMeD) is urging policymakers to adopt a nuanced, tiered tax approach amid the proposed GST reforms, which may eliminate the current 12% and 28% slabs and retain only 5% and 18%, along with a potential new 40% bracket for sin goods.

• By Newsdesk
• New Delhi
• Aug 27, 2025

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Indian manufacturers of low-risk medical devices are bracing for a new Goods and Services Tax (GST) regime that could tilt the playing field in favor of imports and threaten domestic production.

The Association of Indian Medical Device Industry (AiMeD) is urging policymakers to adopt a nuanced, tiered tax approach amid the proposed GST reforms, which may eliminate the current 12% and 28% slabs and retain only 5% and 18%, along with a potential new 40% bracket for sin goods.

AiMeD Forum Coordinator Rajiv Nath warned that applying a uniform 5% GST across the board—even on essential but low-margin medical consumables such as syringes, catheters, and IV sets—would dramatically increase costs for local manufacturers. This could render imports, which often come with lower taxes or higher value-add, more attractive.

On the flip side, Nath highlighted that raising the GST to 18% could inflate prices for hospitals and patients, jeopardizing affordability and healthcare access. He emphasized that the current 12% device tax paired with an 18% tax on inputs creates an inverted duty structure that squeezes margins and undermines profitability.

To strike a balance, AiMeD proposes retaining the 12% GST for most consumables while slashing it to 5% for high-value equipment like diagnostics, reagents, and implants. Furthermore, the body recommends enhancing GST refund mechanisms—especially for input services and capital goods—to alleviate cash-flow pressure on manufacturers.

In a bid to equalize competition, AiMeD also called for hiking the Health Cess on imported medical devices from 5% to 10%, with the additional revenue earmarked for strengthening Ayushman Bharat initiatives.

Expressing concerns over a persistent cost disadvantage, Nath noted that Indian manufacturers are already grappling with a roughly 15% price gap compared to imports from China and ASEAN countries. He urged the GST framework to reinforce the "Make in India" ethos rather than erode it.

As the government moves forward with its GST restructuring plans, industry stakeholders are calling for a calibrated tax regime that preserves affordability for healthcare providers and end-users while safeguarding the financial viability and competitiveness of India's medical device sector.