India to Reduce Import Duties on PLI-Backed Medical Devices from Sixth Year in UK Trade Agreement

India plans to lower import duties on medical devices under the production-linked incentive (PLI) scheme starting from the sixth year as part of its free trade agreement with the UK. This decision was shared by a government official. The agreement, announced on May 6, aims to enhance bilateral trade in goods and services from USD 60 billion to USD 120 billion over five years.

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While India currently imposes up to a 7.5% import duty on medical devices, the UK charges 4.2%. Some experts worry that reducing duties might lead to increased imports from countries like China. To prevent this, India should enforce strict value-addition norms for these imports. The country's medical device imports from the UK rose by over 35% to Rs 2,295 crore in 2023-24, while exports stood at around Rs 1,000 crore.

Focus on Domestic Manufacturing

The PLI scheme encourages domestic production of medical devices. Under this initiative, 19 green-field projects have been launched, resulting in the production of 44 products. These include high-end devices like MRI machines and CT-Scans, which were previously imported. This move aligns with India's Make in India programme and aims to boost local manufacturing capabilities.

India will reduce tariffs on 90% of UK imports under the agreement. Of these, 85% will become tariff-free within ten years. The pact also includes measures to tackle non-tariff barriers (NTBs), ensuring smoother trade flow and preventing unnecessary restrictions on Indian exports.

Addressing Non-Tariff Barriers

To manage NTBs effectively, both nations will sign mutual recognition agreements (MRAs). The UK has agreed to digitally transmit certificates of origin, facilitating easier trade processes. The legal review of the agreement's text is expected to take about three months, followed by a year for approval by the UK Parliament.

The agreement will be implemented once both parties agree on a date. This development marks a significant step towards strengthening economic ties between India and the UK, fostering growth in various sectors including medical devices.

With inputs from PTI