Govt exempts import duty on drugs, food needed for special medical purposes

The government has exempted basic customs duty on all drugs and food for special medical purposes imported for personal use for treatment of rare diseases. The import duty waiver will come into effect from April 1.

Drugs/medicines generally attract basic customs duty of 10 per cent, while some categories of life saving drugs/vaccines attract a concessional rate of 5 per cent or nil. “The Central government has given full exemption from basic customs duty on all drugs and food for special medical purposes imported for personal use for treatment of all rare diseases listed under the National Policy for Rare Diseases 2021,” a finance ministry statement said. The government has also fully exempted Pembrolizumab (Keytruda), used in treatment of various cancers, from basic customs duty.

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In a notification which came into effect on March 30, the exemption has been granted by the Central Board of Indirect Taxes and Customs (CBIC) by substituting “Drugs, Medicines or Food for Special Medical Purposes (FSMP)” instead of “drugs or medicines”.

Food for special medical purposes is a food formulation intended to provide nutritional support to persons who suffer from a specific disease, disorder or a medical condition, as a part of their dietary management.

In order to avail this exemption, the individual importer has to produce a certificate from Central or State Director Health Services or District Medical Officer/Civil Surgeon of the district. While exemptions have already been provided to specified drugs for treatment of Spinal Muscular Atrophy or Duchenne Muscular Dystrophy, the government has been receiving many representations seeking customs duty relief for drugs and medicines used in treatment of other rare diseases.

Drugs or special foods required for the treatment of these diseases are expensive and need to be imported. The ministry said it is estimated that for a child weighing 10 kg, the annual cost of treatment for some rare diseases, may vary from Rs 10 lakh to more than Rs 1 crore per year with treatment being lifelong and drug dose and cost, increasing with age and weight. “This exemption will result in substantial cost savings and provide much needed relief to the patients,” the ministry said.

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Heartwarming gesture

Interestingly, it was senior Congress leader and Thiruvananthapuram MP Shashi Tharoor who shared the story of a young couple who had approached him for an exemption of duty for a drug. It was imported for their young daughter, Niharika, who was suffering from cancer for which the only treatment was an injection that cost Rs 65 lakh. They said they were unable to pay a high duty for it.

A #GoodNewsStory ! pic.twitter.com/OMw9Tarh0t

— Shashi Tharoor (@ShashiTharoor) March 28, 2023

“They had scrounged and saved and borrowed and crowd-funded to raise the money required but when they imported the drug, they needed an additional Rs 7 lakhs for GST that they could not afford. When they approached me I wrote to Finance Minister Nirmala Sitharaman on March 15 asking her help to exempt them from the GST on humanitarian grounds. When there was no reply they approached me again on Sunday (March 26th); the injection was stuck at Mumbai airport but Customs would not release it without the GST payment.”

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“I called Mrs Sitharaman directly this time. I told her this baby depended on her exercising her authority immediately because the drug was perishable and would expire while in the custody of Customs. She was instantly sympathetic. She hadn’t seen my letter so I re-sent it. Within half an hour her PS, Sernya Bhutia, called to tell me she had spoken to the Chairman of the Board of Indirect Taxes and Customs. Within ten minutes Chairman Vivek Johri called me asking for more documentation. By 7 pm today the exemption was granted,” Tharoor had posted on Twitter on March 28.

“The family will get their injection, the baby will live and our exchequer will sacrifice Rs 7 lakh in GST income to bring life and joy to a small child,” Tharoor signed off while thanking the finance minister.

(With inputs from agencies)