The Hindu : Tamil Nadu / Chennai News : Diagnostic scans, high-end tests will end up costing more

Online edition of India's National Newspaper
Wednesday, Mar 08, 2006

Tamil Nadu

Tamil Nadu - Chennai

Diagnostic scans, high-end tests will end up costing more

M. Dinesh Varma

Special Additional Duty in Union budget set to impact on healthcare industry

HI-TECH AT HIGH COST: A range of diagnostic procedures are set to cost more after the Union Budget. — Photo: S. R. Raghunathan

CHENNAI: Diagnostic scans and high-end tests will cost more when the healthcare industry absorbs the 4 per cent Special Additional Duty for medical devices and instruments announced in the Union Budget for 2006-07.

After the new impost, medical instruments such as CT Scanners, MRI machines, Cathlab and ventilators which fell under the 5 per cent Customs duty slab will now attract 9 per cent duty while ultrasound machines, patient monitors, defibrillators and blood cell counters will be charged under the 26.8 per cent Customs duty category. In conjunction with various taxes at the State-level, the difference at the patient's end will translate as a 10-20 per cent increase in diagnostics, industry representatives say.

Basic techniques

change fast

It is also pointed out that the duty exemption for diagnostic kits used to detect life threatening diseases continues to only apply to basic techniques that are increasingly giving way to newer and more precise methods like the Polymerase Chain Reaction (PCR) test.

At present only tests like the ELISA and CLIA enjoy the duty waiver while the PCR kits attracts 37 per cent Customs duty in spite of applications in diagnosis of disease like TB, Hepatitis or bird flu. As a result, labs charge around Rs. 5,000 for a Hepatitis PCR or Rs. 3,000 for a bird flu PCR. A duty waiver as sought by the industry for these tests would have cut costs by 30-40 per cent.

Higher treatment costs

The fear in the diagnostics industry is that the fresh impost coupled with an already anomalous customs tariff structure will create roadblocks instead removing hurdles in the delivery of modern healthcare.

Higher investments to sustain the imports for medical tourism requirements will also result in higher treatment costs to visitors.

"It is not a good sign for a medical device and instruments industry which is almost totally reliant on imports," said G. S. K. Velu, Managing Director, Metropolis Health services and president of Association of Medical Devices and Diagnostics Suppliers of India (AMDSI).

The AMDSI along with the Instrument Wing of the Confederation of Indian Industry had represented to the Health and Finance Ministries on providing duty waivers based on functionality of a test rather than its technology in addition to seeking correction of what it terms anomalies in customs duty structure.

"Testing kits with improved protocol should become more affordable than expensive for challenging diseases like tuberculosis or Hepatitis," said P. Srinivasan, managing director, Lister-Metropolis.

Industry representatives also feel that special economic zone facilities given for some sectors should be extended to medical devices, diagnostics and instruments industry to promote long-term indigenisation and lowering of healthcare costs.

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