AiMeD Flags Risks in GST Overhaul For Medical Devices, Seeks Balanced 5%-12% Tax Structure

New Delhi: The Association of Indian Medical Device Industry (AiMeD) has cautioned that any alteration in Goods and Services Tax (GST) rates for medical devices must be carefully calibrated, as it could affect both patient affordability and the competitiveness of Indian manufacturers.

Most devices now have a 12% GST, while inputs are taxed at 18%, causing an inverted duty structure and margin pressures. AiMeD noted that proposed GST changes—to either 5% or 18%—both present significant risks requiring careful consideration.

“For equipment, electronics, reagents, and implants, reducing GST to 5% would enhance affordability and market reach. However, applying a 5% rate to low-margin consumables like syringes, catheters and IV sets would worsen the inverted duty structure, increasing costs for Indian manufacturers and making imports cheaper,” said Rajiv Nath, Forum Coordinator, AiMeD. “Retaining 12% GST for most consumables while allowing 5% for high-value equipment is the most balanced approach.”

Nath further emphasized that GST policy choices will directly impact patients and consumers as well as manufacturers. “Raising GST to 18% would increase medical device costs for hospitals and households, while a flat 5% GST without refund reforms may create supply risks by discouraging local production. A calibrated structure is therefore essential to ensure both affordability for consumers and sustainability for Indian manufacturers.”

Industry representatives from IRGMA (Indian Rubber Gloves Manufacturers Association) highlighted that nitrile gloves remain a special case, where manufacturers have sought 18% GST due to very high input credit accumulation and low value addition in a highly competitive price-sensitive import-dominated market.

AiMeD suggests streamlining GST refunds and allowing refunds on input services and capital goods to improve cash flow and competitiveness. If the Government lowers GST from 12% to 5%, reduced manufacturer margins may force price hikes, hurting competitiveness against imports. Since GST aims to tax value addition without reducing competitiveness, AiMeD also proposes raising the Health Cess on imports from 5% to 10%, with proceeds funding Ayushman Bharat, to counteract cheaper imports.

“With Indian manufacturers already facing ~15% cost disability against imports from China and ASEAN countries, GST policy must support Make in India, not disadvantage it,” Nath added. “A calibrated GST structure can simultaneously promote affordability for patients, protect consumer interests, strengthen domestic manufacturing, and align with the government’s vision of Atmanirbhar Bharat.”