Impact of India-EU FTA agreement on Indian market, domestic medical equipment manufacturing likely to be affected

Domestic medical equipment manufacturers said the FTA with the EU would further affect domestic manufacturing. Accordingly, 70 percent of the domestic requirement of medical equipment is being met through imports.

The government has also announced the Medical Equipment Manufacturing Incentive Scheme some months back to reduce reliance on imports. However, the FTA with the EU may also impact the manufacturing incentive scheme. The major reason for this is that after the FTA with the EU, any country manufacturing medical equipment, especially China, will be able to send its equipment to India easily without duty.

According to the norms in the EU, the marketing companies there may bring goods from any country and put the EU level as the country of origin, then that product would enter India without duty because after FTA no duty will be levied on goods coming from the EU in India.

After Germany and the Netherlands, India imports most medical equipment from China. The Association of Indian Medical Device Industry, AIMED has also written a letter regarding this apprehension to the Ministry of Commerce. The ninth phase of talks for the Free Trade Agreement, FTA with the European Union, EU has started in New Delhi from last Monday. Medical equipment has also been included in the FTA.

The association says that the name of the EU should be written on the Country of Origin only when at least 35 percent value addition has been done on that product in the EU. Only medical equipment from companies certified by the Bureau of Indian Standards (BIS) should be allowed to enter India duty-free under FTA.

India and the US do not allow any company to use its name as a country of origin without value addition. In the last four years, the import of medical equipment has increased by 68 percent at the domestic level.

Association founder Rajeev Nath said that we are not against FTA, but this should be kept in mind in the FTA so that the domestic manufacturing of medical equipment, which is being set up with great difficulty, does not suffer a setback.

On the other hand, the government is also concerned about carbon tax or Carbon Border Adjustment Mechanism (CBAM) in the FTA talks with the EU. The EU has announced to impose carbon tax under CBAM from January 2026. This will affect the export of cement, steel, and many agricultural products.

If the EU succeeds in imposing the tax under SIBM, then despite the FTA, many items from India will be subject to duty on exports to the EU, whereas, after the FTA, there will be no duty on the products coming from the EU.