MTal seeks immediate financial support to sustain operations

Medical Technology Association of India on Monday sought immediate release of pending payments and tax exemption to sustain operations, saying that persistent financial and logistical bottlenecks are making it difficult for the sector to operate.

Supply of medical devices is an essential service to manage COVID-19 pandemic in the country, but persistent financial and logistical bottlenecks are creating operational challenges for the sector, MTal, which is an association of research-based medical technology companies, said in a statement.

"We urge the government to release the pending payments, currently close to Rs 1,700 crore, to all healthcare service providers enrolled in healthcare schemes like Central Government Health Scheme and Rashtriya Swasthya Bima Yojana," it added.

There are cases where payment is pending for more than five years. The release of payment will facilitate the required cash-flow in the healthcare industry, the body said.

It also urged the government to consider giving tax and duty exemption (GST, Basic Customs Duty) to the medical device industry to cope with the liquidity challenges.

"The government should revoke the additional 5 per cent health cess on all medical devices or at least on those which are used in treatment of COVID-19 patients," MTal said.

More than 130 medical devices - from specimen collection to infection control devices and respiratory care devices - are used in COVID-19 treatment, it noted.

Besides, the government should look at zero interest working capital loans for the segment, it added.

MTal said the situation of the sector has not improved much even after partial lifting of nationwide lockdown from April 20 as a result of which factories and warehouses of our member companies are either shut or operating at 20-30 per cent capacity.

As the lockdown gets extended for another two weeks, these challenges will continue to impede the supply of medical devices unless the industry gets support from the government, it added.

"Current hospital occupancy is only 30 per cent because of restrictions on elective surgeries and demarcation of capacity for COVID-19 patients. As a result, the hospitals are facing a steep decline in revenue," MTal said.

This is having a domino effect on medical devices sector as its overall revenues are depressed deeply and its payments are not coming on time, it added.

"Medical devices sector has always been the backbone of in-patient healthcare. Despite numerous challenges, it has shown commitment and resilience in the face of adversity and has ensured uninterrupted supply of medical devices to hospitals. But the challenges are only increasing for the sector as it braces for the extension of the lockdown," MTal Chairman and Director General Pavan Choudary said.

There is an urgent need for intervention from the government to help the medtech sector recover and continue fulfilling its role in ensuring critical care services in the country, he added.