Dr Reddy’s expects new GST framework to address critical issues in pharma sector

Association of Indian Medical Device Industry says changing GST rates for medical devices could impact domestic competitiveness if not carefully managed

New Delhi: Dr Reddy’s Laboratories on Tuesday expressed hope that the new GST structure will take care of existing challenges and aid in ushering a rationalised, industry-friendly tax framework for the pharmaceutical industry.

For an extended period, the pharmaceutical sector has faced 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, Dr Reddy’s Laboratories Chairman Satish Reddy said in a statement.

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“We are optimistic that the forthcoming reforms will address these critical concerns and introduce a rationalised, industry-friendly tax framework,” he noted.

Such measures will significantly improve the affordability and accessibility of essential medicines for every citizen, while also enhancing the global competitiveness and innovation capacity of the Indian pharmaceutical industry, Reddy said.

The industry remains fully committed to working in close partnership with the government to ensure that these reforms translate into tangible benefits for patients and the broader healthcare ecosystem, he said.

In an increasingly complex and uncertain geopolitical environment, these steps will not only reinforce India’s healthcare security but also strengthen the country’s role as a trusted partner in global health supply chain, he added.

In a separate statement, the Association of Indian Medical Device Industry (AiMeD) sought retaining of 12 per cent GST for majority of consumables and 5 per cent rate on costly equipment.

The industry body noted that changing GST rates for medical devices could impact domestic competitiveness if not carefully managed.

Most devices have a 12 per cent GST, while inputs are taxed at 18 per cent, causing an inverted duty structure and margin pressures, it stated.

AiMeD Forum Coordinator noted that for equipment, electronics, reagents, and implants, reducing GST to 5 per cent would enhance affordability and market reach.

However, applying a 5 per cent 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, he stated.

Retaining 12 per cent GST for most consumables while allowing 5 per cent for high-value equipment is the most balanced approach, AiMeD advocated.