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We have miles of roadblocks to remove before we sleep
Context: Exposure of roadblocks in various sectors due to COVID crisis.
There are many effects of COVID-19 that we all can see. But there are many other effects that weren’t visible but to save lives, these regulatory roadblocks that were present in the country are now visible.
This brings to the question of what these roadblocks are and what are their impacts on the people of India. In this article, we will explain the following:
- What is the status of import duties on medical equipments in India?
- What are the impacts of import duties on medical equipments on domestic consumers?
- What has government announced recently regarding such import duties?
- How government regulations affect approvals of testing kits and license for COVID-19 tests?
- How Rules of APMCs impacts the farmers?
- Way forward
What is the status of import duties on medical equipments in India?
- India has a list of import duties (custom duties plus cesses plus special tariffs) on almost every product.
- 80-90% of the country’s requirements in the medical devices sector are imported.
- The top five countries India imports medical devices from are the US, Germany, Singapore, China and the Netherlands.
- 5% health cess over and above 7.5% custom duty on import of medical equipmentwas announced by Finance Minister Nirmala Sitharaman in February, 2020.
- The total duty varies between 11% and 22%, depending on the product.
- This makes foreign-manufactured goods expensive and domestic goods become cheaper.
What are the impacts of import duties on medical equipments on domestic consumers?
- The visible effect of customs duty is to put curbs on foreign suppliers and promote domestic manufacturing giving a boost to Make in India campaign as well.
- The unseen effect of import duty is that the customer has to pay higher prices to a domestic producer leaving less money in his pocket.
- What a customer can buy at a cheaper price (foreign manufactured goods) now buys at higher price (domestic manufactured goods). Thus increased cost due to import duty is borne by the domestic consumer indirectly.
- Second unseen effect includes the delays in collection of these duties by the government.
- Other unseen effects are the multiple regulatory procedures and paperwork to release these goods from the ports which leads to delay in their reach to end consumers.
- These unseen effects became visible due to shortage of testing kits amid COVID-19 pandemic and the increased cost was imposed on the sick Indians.
What has government announced recently regarding such import duties?
- Therefore, the government has exempted imports of Personal protection equipment (PPE), Covid 19 test kits, ventilators, face masks and surgical masks from basic customs duty and Health cess, with immediate effect till September 30, 2020.
- Input materials required for making these products locally, that may have to be imported, have also been exempted from basic customs duty and cess.
- There should be permanent removal of these duties post September 30, as it will give rise to competitive business environment to the Indian firms and Indians will pay less for the medical equipments.
How government regulations affect approvals of testing kits and license for COVID-19 tests?
- COVID-19 testing Kits manufactured in India now needs National Institute of Virologyvalidation and then apply to Drug Controller General of India (DCGI) for manufacturing licence.
- Earlier, COVID-19 testing kits should be USFDA approved or European CE certified or both.
- Still, several regulations are there for getting both approval and license.
- Therefore, there is a challenge to mass testing in India as there are just 236 laboratories (as on 13thapril)–166 government and 70 private—that have been approved by ICMR for covid-19 testing.
- The regulations involved in getting a clearance for testing kit should be minimised to save lives amid the crisis.
How Rules of APMCs impacts the farmers?
- Under APMC Act, markets are divided geographically into different regions and insist farmers to sell to a mandi in their region only.
- The farmers do not receive just prices for their produce despite the end consumer paying higher price for the same produce.
- Most of the money goes to the middlemen who own the license of the Mandi.
- The visible effect here is that farmers are allotted mandis and their transactions can be controlled by the state, thereby protecting their interests.
- The unseen effect is they are severely under paid. Also, the farmers are denied big market for their goods, and consumers and retailers are denied the choice of where they buy their vegetables.
- Other unseen effect is the non-development of warehousing and cold storage systems that are integrated with global supply chains.
- Under the crisis of COVID-19, the Prime Minister recommended that all chief ministers suspend the provisions of their respective APMC statutes for three months.
- This will allow farmers to sell their harvest from multiple locations and directly to any buyer. Suspension of APMC rules will allow farmers to sell directly to consumers, via apps or otherwise, at their doorstep. It will also allow farmers to sell crops directly to bulk buyers, processors, and big retailers without a licence or following any registration process.
- However, as agriculture is state subject, state governments will need to allow it.
- APMC mandi system should be completely abolished because it denies choice access to food to both farmers and consumers.
Way Forward: Since many states have not implemented APMC Act, 2003, Agriculture Ministry has come up with a new model Agricultural Produce and Livestock Marketing (promotion and facilitation) Act, 2017 (APLMA, 2017). Some features are:
- Each state will be a one single market instead of earlier division of state into different markets.
- Single-point levy of market fee across a State.
- Single license for agriculture produce as well as livestock. And licence will be given by Director of agriculture marketing and not APMC.
- To end monopoly of APMC, as it will not have regulatory power and will act as a market only.
- Promotion of National Agriculture Market through inter-state trading license.
India was among the last major countries to experience an outbreak of Covid-19. So while it has had a good head start in preparing itself to face the challenge, the next couple of weeks will prove crucial in its battle against the invisible enemy. India in a fight against COVID-19 is taking all measures, including 21 day lockdown and further extending to May 3, travel restrictions at large, providing essential supplies to citizens. Testing has increased rapidly. Several preventive measures are being taken by Central as well as respective state governments to prevent the further increase the cases.
There will be major challenges to overcome post the pandemic. COVID-19 crisis also provides opportunities. Countries may witness better healthcare – both management and facilities. New social and behavioural norms – “social distancing”, “wearing masks”, “maintaining hygiene”, etc., are the new normal, and countries have to adjust with such new normal amid the pandemic. Surely, vaccines and proper medicines to tackle the COVID-19 will be invented. However, there is no place of complacency.
Countries have to be prepared to tackle another such shock in future. At the same time, countries shall undertake reform to strengthen the digital economy and e-commerce not only to manage the pandemic but also to facilitate trade. Trade barriers should not be allowed to happen in trade in goods and services particularly those feed the health science. Also, to sustain the measures taken to combat the crisis should be maintained if they are for the welfare of the citizens of the nation.