Dr Reddy’s Laboratories has expressed optimism that the new GST structure will address the existing challenges faced by the pharmaceutical industry. The industry has been dealing with structural challenges, including higher GST rates and an inverted duty structure, which have impacted the cost efficiency of domestic manufacturing and the affordability of medicines. Chairman Satish Reddy stated that the company is hopeful that the forthcoming reforms will introduce a rationalized, industry-friendly tax framework, which will improve the affordability and accessibility of essential medicines for citizens.
The reforms will also enhance the global competitiveness and innovation capacity of the Indian pharmaceutical industry. The industry is committed to working with the government to ensure that these reforms benefit patients and the healthcare ecosystem. In a complex geopolitical environment, these steps will reinforce India’s healthcare security and strengthen its role as a trusted partner in the global health supply chain.
The Association of Indian Medical Device Industry (AiMeD) has also provided its input on the GST rates for medical devices. The industry body has sought to retain the 12% GST for most consumables and a 5% rate for costly equipment. AiMeD noted that changing GST rates for medical devices could impact domestic competitiveness if not carefully managed. The industry body argued that reducing GST to 5% for equipment, electronics, reagents, and implants 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. AiMeD advocated for retaining the 12% GST for most consumables while allowing a 5% rate for high-value equipment, which is seen as the most balanced approach. The industry body’s suggestion aims to strike a balance between enhancing affordability and maintaining the competitiveness of domestic manufacturers.
Overall, the pharmaceutical and medical device industries are seeking a rationalized tax framework that addresses the existing challenges and promotes the growth of the sector. The government’s decision on the GST structure will have a significant impact on the affordability and accessibility of essential medicines and medical devices in India. The industry is hopeful that the reforms will translate into tangible benefits for patients and the broader healthcare ecosystem, while also strengthening India’s role in the global health supply chain.