India will adopt a phased strategy to lower import duties of selected medical devices under its production-linked incentive (PLI) scheme. It recently concluded a free trade agreement (FTA) with the United Kingdom.
The cutdown will start after the sixth year of the pact's implementation, with duties not planned for such devices completely eliminated. This decision harmonises consumer access with the domestic manufacturing aspirations of the 'Make in India' initiative.
The India-UK FTA, launched on May 6, is set to double bilateral goods and services trading to $120 billion in the next 5 years. No medical devices that fall under the PLI scheme will have an immediate relief from duty, as the Indian government wants to protect the domestic manufacturing ecosystem that has recently received a push owing to a dedicated policy push.
This means India imposes an import duty of up to 7.5% on medical devices, and the UK pays a lower duty of 4.2%. Sure, industry experts have raised fears that any relaxation of the duty can fuel dumping, especially from countries like China. To avert this, they propose the need for strict value-addition norms prior to concessional duty importation into the sector.
India's imports of medical devices from the UK increased by over 35% in 2023– 24 for a value of ₹2,295 crore, while exports from India to the UK were in the vicinity of ₹1,000 crore. Important articles dealt with disinfectants, spectacles, orthopaedic appliances, hearing functions, radiography capacities, and other surgical or diagnostic equipment.
The PLI scheme has so far resulted in the commissioning of 19 greenfield projects. These facilities now produce 44 of these products including top-of-the-line equipment such as MRI machines, linear accelerators, and CT scanners, which were previously imported.
In the broader FTA, India will phase out 90% of tariffs applicable to UK exports and 85% of tariff lines will be fully duty-free over the next ten years. The agreement also provides mechanisms to help overcome non-tariff barriers limiting market access.
Both countries intend to sign mutual recognition agreements (MRAS), and the two countries also agreed to move the certificates of origin to digital transmission to facilitate smoother trade.