The US government is unhappy with a host of Indian economic policies, which they say affect US interests, although they may benefit Indian consumers and manufacturers.
On March 30, the United States Trade Representative (USTR) released their annual report titled the ‘2018 National Trade Estimates’ (NTE). In a 17-page chapter on India, the US said that the ‘Make in India’ policy was “discriminatory” and that the Goods and Service Tax and other tariffs “impede imports of US products into India.” With regard to ‘Make in India,’ the US raised concerns on a range of items, including medical devices.
As The Wire reported this week, the NTE report is a significant new development– it is the first public expression of US’s unhappiness with policies on medical devices that protect Indian consumers and manufacturers. So far, there have only been back-room communications, urging the Indian government to roll back its efforts to make medical devices more affordable.
The US government also just announced that it will be reviewing India’s status as a recipient of certain tariff allowances for imports by the US as a consequence of India’s price regulation on medical devices.
Indian policies for domestic manufacture are upsetting the US
In the NTE report, the US government traced India’s initiatives to boost local manufacturing and exports and devoted one section to the Indian government’s procurement policies.
The Indian government has been putting in place measures to help domestic manufacturers, by giving them preference in the government’s own procurement of goods, especially in the areas of medical devices, information and communication technology, clean energy, electronic goods, cyber-security software products and defence equipment.
The US government’s report noted that India’s move “is aimed at facilitating local manufacturing and boosting domestic demand for locally manufactured products.” But the US also added that it was aggrieved by the move as it “outlined discriminatory government procurement policies designed to stimulate domestic manufacturing of electronics and telecommunications equipment.”
The NTE report goes on to say that “India also increased its tariffs on medical devices in 2016 from 5% to 7.5%. The increased tariff applies to devices such as pacemakers, coronary stents and stent grafts and surgical instruments, and also to parts of medical devices.”
The report complains that all of this serves to benefit “Indian manufacturers at the expense of importers and disadvantaging Indian patients. US companies have raised significant concerns with these actions.”
Indian manufacturers are not happy with the US government’s overt and covert pressure either. “These US organisations are arm-twisting the Indian government. The US itself has trade barriers for Indian goods. Now the US is upset when the Indian government takes action to meet its own social objectives,” says Rajiv Nath, forum coordinator of the Association of Indian Medical Device Industry.
Parliamentary committee encourages ‘Make in India’ for devices
A parliamentary standing committee report released in March 2018 criticised the government for demanding US certifications for domestically produced medical devices and said that the Indian device industry should be encouraged instead. The committee especially referred to government procurement tenders in its report.
The report said: “The committee would like to emphasise that the medical device industry of India is a huge market with enormous manufacturing potential. The committee, therefore, recommends that the department must make a concerted effort in promoting ‘Make in India’ programme in medical device industry, in coordination with the other government departments.”
US reviews its policies towards India to exert pressure
The comments in the NTE report are also swiftly being backed up by action. The US has also announced that it will be reviewing India’s status as a recipient of the US’s Generalized System of Preferences (GSP).
India and a few developing countries receive preferential treatment for exports to the US via the GSP. It works as a carrot and stick mechanism to keep developing country markets open to US goods, while allowing them some access to developed country markets.
As The Wire reported, one of the reasons why the US has decided to put India’s status under review is because AdvaMed, representing the US medical device industry, petitioned the USTR against India’s price caps on cardiac stents that was announced last year.
Commenting on this, Malini Aisola of the All India Drug Action Network says that the US government is “toeing the line” of US medical device companies, who dominated India’s market for years until last year’s price regulation on medical implants.
“The US government is ignoring the millions of dollars it leeched from Indian patients through exploitative pricing over more than a decade and is complicit in putting the health of millions of people at stake by pressurising the Indian government to not act to expand access to healthcare,” said Aisola.
“We are very upset with repeated attempts by US organisations like AdvaMed and their Indian counterparts, to portray themselves as the voice of Indian industry when they themselves don’t have substantial investments in Indian manufacturing plants. They openly lobby against Indian interests and industry, and now seek to advice the Indian government on how to boost manufacturing, after first hurting manufacturing,” said Nath.
Abby Pratt, AdvaMed’s vice president, global strategy and analysis, said they are “pleased” that the USTR accepted their petition to suspend or withdraw India’s GSP.
“Discussions with the Indian government have evolved since this petition was filed over the past six months and we remain cautiously optimistic that an alternative solution to price controls on medical technologies – such as trade margin rationalisation – may yet be found,” said Pratt.