Domestic medical device makers wary of India-EU FTA

Even as India and the European Union (EU) continue their discussions towards a free trade agreement (FTA), home grown medical device manufacturers are wary about the impact of possible tariff reduction India could offer on import of medical devices from EU member countries.

Industry body Association of Indian Medical Device Industry (AiMeD) cautions that if the FTA goes through, third-country products could get routed to India via FTA countries as "country of origin’ is not a requirement in EU and marketing companies are permitted in EU to label packaging as "legal manufacturer".

“Even if a product is Chinese or Taiwanese it can be labelled and sold to India as a purported EU made product coming from a ‘legal manufacturer’ in EU as country of origin is not a requirement in EU unlike in USA , India, Saudi Arabia and most countries," Rajiv Nath, forum coordinator, AiMeD, says.

Two EU member countries, Germany and Netherlands, are among the top five exporters of medical devices to India.

In a letter to the Commerce Ministry, AiMeD pointed out that the imports of medical devices in India has grown 68% in the last four years, making India dependent on imports to the tune of 70% currently. It also highlighted that India’s existing import duty on medical devices is already very low (0.0%-7.5%) and lowering duties further by including these medical items in the EU-FTA list would not only jeopardise the medical security of India but also prove to be highly detrimental to the domestic manufacturing industry.

According to AiMeD, whenever India has signed any FTA with another country, the imports of medical devices into India have grown. “India signed the Japan-India Comprehensive Economic Partnership Agreement (JICEPA) but the imports of medical equipment from Japan has risen from ₹1,826 crore in FY20 to ₹3,085 crore in FY24, a jump of 19%. Similarly, India inked India–Singapore Comprehensive Economic Cooperation Agreement (ISCECA) but the imports from Singapore have jumped from ₹4,294 crore in FY20 to ₹6,779 crore in FY24”, the letter says.

The association wanted India to seek Mutual Recognition Agreement of regulatory approval with the EU as part of the FTA. "Alternatively we need a policy of inspection of EU factories and verification of compliance in the EU by Indian Regulators. We recommend factory inspection and verification by BIS & CDSCO inspectors for Country of Origin with value addition of 35% as mandatory minimal conditions," the association says.