Interim Budget 2019 : Indian Medical Device Manufacturers ask for more!

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Though there are several positives, when you view the fine print, the proposed policy initiatives are a far cry from creating an attractive environment for the domestic production of medical devices as well as catalyzing R&D.


 As a member of the healthcare industry I am happy that through the interim budget, the Government has announced its intent to continue to focus on building a healthier India. The healthcare sector has got a boost with nearly 13% hike in the health budget, the highest in the last two financial years. An allocation of Rs. 6400 crores towards Ayushman Bharat, commissioning of the 22nd AIIMS centre and setting up of health and wellness centres, are all positive moves that are set to bring in a new wave of health transformation especially for the lower and middle class families.

Artificial Intelligence - harnessing the benefits of new age technology

The announcement to set up a National Artificial Intelligence portal will lay further emphasis on technology-driven growth. While AI has already taken the world by a storm, it will be interesting to see how healthcare providers will leverage on this technology for better detection and treatment areas.

Infrastructural Development and increasing accessibility

Further, the Government’s focus on infrastructural development in the rural areas will boost the healthcare delivery chain. Allocation of funds for infrastructural development and increasing accessibility in the North eastern states will give an impetus to the manufacturing base in that region. An encouraging move for an Indian manufacturer like Transasia Bio-Medicals, who has recently set-up a full fledged production and export capability in Sikkim. Besides this, there are scale-ups in the other healthcare initiatives announced in the past.

Unfilled gaps

Hard reality of the USD 7 bn Indian medical device industry is that imports still constitute to 72-80%. While Make in India continues to remain the central focus for the government, as an Indian manufacturer, we wish there would have been some more efforts on reducing the dependency on imports. Ironically, the government wants to reduce the healthcare cost in India, however, there is no beneficiary scheme for the local manufacturers of medical devices. As industry body members, we had collectively put forth our recommendations to the Government, to encourage Make in India:
  • Even now, the import duty on raw materials is higher than that on finished products. To reduce the dependency on imports, we expected the Government to provide reasonable tariff protection for enabling Make in India.
  • The implication of GST has led to imported devices being cheaper by 11% making it difficult for the Indian manufacturers to compete with the Chinese imports, especially in Government tenders. The interests of the domestic manufacturers need to be protected through a revision in the GST regime so that not everyone get the benefit of input credit.
  • The import duty levied by India is the lowest among all the BRIC countries. Needless to say we expected the import duty to be hiked.
  • To encourage R&D in India, we expected the Government to provide a tax holiday to the medical device R&D centres to boost investment in setting up in-house R&D capabilities.
  • Introduction of export incentives would have led to further encouraging this growth engine for the economy.
  • Healthcare services continue to be exempted from GST. As a result they are not able to claim input credit resulting in higher cost of treatment. On the other hand, if zero GST is levied on hospitals, the cost of treatment could be lowered for the patients. 
Nevertheless, we hope that as a country, we are able to accelerate further reforms to promote Health for All.

Authored by:

Mr. Y. S Prabhakar, 
CEO, 

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