The pandemic and its ravaging resurgence this year has underscored the imminent need to expand and bolster our country’s healthcare set-up. While at one level, physical infrastructure, manpower in the form of doctors and paramedics will all grow, an integral part of this renewed focus should be the essential medical devices and consumables segment. India happens to be the fourth largest-medical devices market in Asia and also holds the promise of the highest growth potential among all areas of the healthcare industry. Given this scenario the Indian medical devices industry has the prospect of, becoming one of the biggest contributors to India’s health infrastructure, much the same way that the Pharma industry has done.
To understand the potential better let us look at some of the key numbers. The current market size of $11billion is expected to reach $11.86 billion in 2021-22 and $50 billion by 2025. These numbers do look impressive and also project a strong growth trajectory; however, the downside is a high dependency on imports which accounts for 80-85 %. If dependency on imports have to be lowered and exposure to erratic supply chains reduced, the only option is to step up local manufacturing capabilities and strengthening the country’s competitive power to become a global manufacturing hub in the long run.
Combining the latent prospects of this sector with the ‘Make in India’ initiative, local manufacturers can step up to meet the rising demand of essential medical devices and consumables for the country. In order for this to be a win-win situation for all, there are a few areas that will need to be addressed by the government to promote indigenous manufacturing in this sector.
Key aspects for Indian Medical Devices industry to build an Atmanirbhar Bharat
Favourable Policy Environment: At a time when India has embarked upon the Atmanirbharta journey, the need of the hour for the industry is to closely work in collaboration with the government to revive the healthcare ecosystem in the context of economic, demographic and social transformation across the globe. The government of India has commenced various initiatives to empower the medical devices industry, a strong emphasis on R&D and 100% FDI under the automatic route for both brownfield and greenfield medical device setups. To spur the local manufacturing and attract huge global investments, the government has launched two additional schemes last year: sanctioned Rs 400 crore for the setting up of four medical device parks and PLI scheme for domestic manufacturing of medical devices, with a total outlay of funds worth Rs.3,420 crore (US$ 468.78 million) for the period FY21-FY28. Apart from this, the Government has also set up a National Medical Devices Promotion Council to promote local manufacturing of high-end medical devices and attract investments in the sector. These schemes have further boosted investor confidence and brought in strong FDI inflows to reflect the improved confidence of global players.
Prospects to be a global manufacturing hub: The Medtech industry is largely dependent on other countries to procure raw materials and we need to look for new alternates to challenge this arrangement to become a preferred manufacturing hub. With the available resources and current policy environment, India can become a global manufacturing hub offering a conducive business environment. An ecosystem offering simplified land and labour laws, strong supply chain, better infrastructure, and single window clearances to develop a robust manufacturing ecosystem. This will further aid in attracting foreign investments, implementing latest technology, job creation and increasing exports.
Nurturing Innovation: Keeping innovation as the focal point towards growth and expansion, a strong funding mechanism will be imperative to create differentiated products. This can only be achieved with a public-private participation, capital subsidies and tax incentivization in medical devices parks.
Boosting local manufacturing: The current landscape needs more reforms to play a key role in global supply chain and increase self –reliance. The industry has also demanded a reduction in the current GST rate to decrease import dependence. If sanctioned, the relaxation will further boost the morale of home-grown manufacturers to produce high–end medical equipment locally.
Providing impetus to exports: There is a need to incentivize exports under the Merchandise exports from India scheme (MEIS). Facilitating single-window clearances for government approvals for the local companies, rebates for costs related to product registrations in foreign countries and exhibition participation and keeping exported products outside the purview of price control will together contribute to a larger push for exports.
Need for decreased input cost: Labour and electricity cost of manufacturing the components is way too higher due to which manufactures are unable to reach the economies of scale. The government needs to provide a robust infrastructure and logistics support to enable manufacturers to reduce the input cost and manufacture products at a competitive rate.
With a collaborative and proactive approach, the Indian medical devices industry is set to witness a large-scale revolution with best-in class products and manufacturing facilities. Government support in the form of far-reaching landmark policies, will create a level playing field for all players. Our approach towards mitigating the current challenges will help carve a niche for us in the global medical devices market and also enable the country to become a world-class healthcare destination.
Views expressed above are the author’s own.
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