India-UK FTA Raises Concerns for Medical Device Sector

India-UK FTA Raises Concerns for Medical Device Sector

Why in the News ?

The proposed India-UK Free Trade Agreement (FTA) has alarmed domestic medical device manufacturers, who fear that Chinese products may gain duty-free access to Indian markets via the UK, bypassing tariffs and undermining India’s medtech ecosystem.

India-UK FTA Raises Concerns for Medical Device Sector

Concerns over Chinese Backdoor Entry

  • Domestic manufacturers fear Chinese medical devices may be routed via the UK under the zero-tariff clause of the India-UK FTA.
  • The UK is not a major medtech producer, but its supply chains could serve as conduits for third-country goods, especially from China.
  • This raises alarms about potential dumping and market distortion in India’s $11 billion medtech sector.

Suggested Safeguards to Protect Domestic Industry

  • Industry bodies urge strict “rules of origin”, with a minimum 55% UK content (excluding labor, packaging, and shipping).
  • Suggestions include:
    • 35% value-addition threshold,
    • Mandatory documentation of manufacturing process,
    • Clearly defined substantial transformation criteria.
  • Call for periodic product review, safeguard clauses, and exclusion of vulnerable categories from zero-tariff access.

India’s Growing Strategic Medtech Sector

  • India’s medical device industry is projected to grow from $11 billion to $50 billion by 2030.
  • Industry stakeholders stress protecting this strategic sector while enabling genuine UK-origin products to benefit from the agreement.

Free Trade Agreements (FTAs) – Key Points

●Definition: FTAs are mutual agreements between countries or blocs to reduce or eliminate trade barriers like tariffs, quotas, and standards.
●Scope: Cover trade in goods, services, and other areas such as IPRs, investment, government procurement, and competition policy.
●Types:
○Preferential Trade Agreements (PTAs)
○Comprehensive Economic Cooperation Agreements (CECAs)
○Comprehensive Economic Partnership Agreements (CEPAs)
○Customs Unions and Common Markets
●Major FTAs Signed by India:
○India-UAE CEPA, India-Japan CEPA,
○India-South Korea CEPA,
○ India-ASEAN FTA, India-Mauritius CECPA.