Domestic medtech lobby seeks govt support as key input costs rise 50%

Domestic medical device makers seek government support as input costs surge up to 50 per cent amid West Asia disruptions, flagging supply chain stress and rising logistics costs

Domestic medical device manufacturers have demanded rationalisation of inland haulage charges, fast tracking of goods and services tax (GST) refunds, and Customs duty rebates on key raw material imports. This is owing to input costs rising by up to 50 per cent because of the West Asia war.

 

In different letters to Union Commerce Minister Piyush Goyal and Revenue Secretary Arvind Shrivastava, domestic medtech manufacturer lobby Association of Indian Medical Device Industry (AIMED) said the ongoing blockade at the Strait of Hormuz has led to an unprecedented increase in the costs of key raw materials and energy inputs.

 

This includes a nearly 50 per cent rise in critical plastics used in syringes, intravenous (IV) sets, catheters, and examination gloves.

 

Similarly, manufacturers are seeing a 20 per cent increase in packaging materials and diesel-based self-generated power.

 

“While earlier shipment delays of one-three weeks were manageable, the prolonged nature of the current disruption risks production slowdowns. It also exposes the industry to opportunistic pricing by dominant raw material suppliers,” said Rajiv Nath, forum coordinator of AIMED.

 

The developments are beginning to materially affect the cost structures, supply chain stability, and operational continuity of domestic manufacturers.

 

This is especially true for those producing high-volume items such as syringes, catheters, nitrile examination gloves and disposable medical devices.

 

While there is no shortage of syringes or other medical disposables currently, the body stated that manufacturers are experiencing noticeable price escalations, longer lead times, and elevated freight and logistics costs.

 

“To sustain operations, many manufacturers are needing to revise product prices by 10 to 20 per cent,” AIMED stated in its letter.

 

To counter this, the body has sought the government to advise the Container Corporation of India (CONCOR) to maintain inland haulage charges (IHCs) at cost-covering levels and avoid opportunistic increases during this period of global disruption.

 

IHCs are fees charged for transporting export and import containers by rail between gateway ports and inland container depots (ICDs).

 

The domestic medtech lobby has sought fast tracking of pending GST refunds and strict adherence to the government's previous seven-day refund assurance.

 

“The industry continues to face severe working capital blockage due to an inverted duty structure, with an 18 per cent GST rate on inputs versus 5 per cent GST on finished medical devices,” an industry executive said. He added that this results in large accumulation of unutilised input tax credit and increased bank borrowings.

 

Other demands include avoiding any reduction in import duties on finished devices and a temporary customs rebate on raw material and component imports.

 

Nath said that several members have also sought AIMED’s support in advising government procuring agencies to permit rescinding of tender contracts under force majeure, given the extraordinary circumstances.

 

“These requests stem from the severe cost escalations and supply chain uncertainties currently being faced, which are making it increasingly unviable for companies to continue supplies under existing contractual terms,” he added.