Impact of Make in India on Medical Device Industry
A population of 1.2 billion relies on 70% imported medical devices
Make in India to turn the table soon!
Suresh Vazirani
Globally, the medical device market is segregated into six major segments, of which diagnostics imaging constitutes the largest chunk. In-vitro Diagnostics is the second largest segment with an estimated 24% share*. In India, the Medical Devices industry is presently valued at USD 5.2 billion and contributes 4-5% to the Indian healthcare industry. As an industry leader, I am glad that the Government’s Make in India initiative recognizes Medical Devices as a sunshine sector.
Today, the liberalization of government policies allow upto 100% FDI through automatic route. Taking advantage of this lucrative opportunity, an increasing number of MNCs are setting up their manufacturing bases in India. However, we still have a long way to go. It is appalling to know, that India loses Rs. 60 lakh crore a year, due to poor healthcare system. And it goes without saying diagnostics forms a base for healthcare and medical devices play a very important role. Catering to a population of 1.2 billion and importing 70% of the medical devices, is definitely not a viable situation for any country.
To counter this loss, what we need is to Make in India, in order to address the two basic needs of affordability and accessibility. What this industry needs is the approach adopted for the automobile sector. Today, every single automobile manufacturer is making in India. And this is because the import duty on parts is only about 10% while on finished cars it is upto 90%. So obviously, it makes sense to Manufacture in India and that is how it has become a booming industry, providing automobiles at affordable prices.
On the positive side, there is a lot of support that the Government is extending to ensure that the medical devices sector is considered as significant as the other sectors. The task force constituted by the Government aims to including the segregation of medical devices from drugs. Currently only 15 categories of medical devices are regulated. The new set of rules should be able to enhance ease of doing business and ensure availability of quality medical devices.
Going forward, periodic renewal of licenses will not be required. Consequently, manufacturing and import licenses will be valid until it is suspended or cancelled. The rules also aim to create a single window mechanism to promote a culture of self-compliance by manufacturers of medical devices.
Earlier, medical devices attracted taxes of 13%. With GST, the rate is now 12% - 18%. This new rate is too high and should be reduced to 5% or nil. I believe that every Govt. should provide free healthcare to its citizens especially the middle class and poor. But if India is not able to provide free healthcare, cant it atleast provide totally tax free healthcare?
"As a manufacturer of diagnostic instruments, for me the direction in which the industry is moving is very exciting! It has steadily grown at a CAGR of 15.8%. As per industry estimates, the Indian medical devices market will grow to USD 50 billion by 2025. Currently, India is counted among the top 20 global medical devices market and is the 4th largest medical devices market in Asia after Japan, China and South Korea.”
So as you can see, there is a sea of opportunities for the Indian manufacturers.
The Government and Industry need to work closely for a focused approach encompassing distinct and specific policies, an encouraging fiscal environment, large healthcare spend, a supportive environment for R&D and its commercialization, attracting global players and at the same time encouraging indigenous players to scale up. The setting up of medical technology industrial parks linked with industrial corridors and technological transfer institutions is a positive move. Further the Government’s efforts in encouraging FDIs, PPP and inverted duty structure correction are all precursors to the growth of this sector.
The Government and Industry need to work closely for a focused approach encompassing distinct and specific policies, an encouraging fiscal environment, large healthcare spend, a supportive environment for R&D and its commercialization, attracting global players and at the same time encouraging indigenous players to scale up. The setting up of medical technology industrial parks linked with industrial corridors and technological transfer institutions is a positive move. Further the Government’s efforts in encouraging FDIs, PPP and inverted duty structure correction are all precursors to the growth of this sector.
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