With the release of National Medical Policy (NMD) 2023, India is at the cusp of a radical change in the way we view the medical technology (MedTech) industry. The policy envisages India emerging as the global leader in the manufacturing and innovation of medical devices by achieving a 10-12% share in the expanding global market over the next 25 years. This is expected to deliver significant benefits to patients, in employment generation, to enhance our foreign exchange earnings, and to enable India’s march to a developed country. So, how does the world’s fastest-growing economy, a global top 10 MedTech product market, with expertise in software/AI/ML/digital make the ‘Make in India’ dream a reality?
Believe in Make in India
The Government of India has created a specific production-linked incentive (PLI) scheme for MedTech products. When the scheme is viewed concomitantly with the NMD Policy, there is a strong impetus to increase MedTech product manufacturing in India. This is commendable and noteworthy. While the world benefits from ‘Made in India’ MedTech products, we need to ensure that Indian patients benefit from these technologies across public and private healthcare facilities.
The Public Procurement Policy prioritises ‘Make in India’ products. To ensure access to quality care for Indian patients, the government allows the import of selected products/technologies that are not locally manufactured. This list is reduced every year as local manufacturing capability matures. There were 371 MedTech products allowed for import in 2022 and reduced to 364 in 2023. Products not on the list are expected to be procured from local manufacturing facilities. The process is managed with feedback from industry and procurement agencies. It is important, that the list is consistently and uniformly applied to all public procurement, including central, autonomous healthcare institutions and state-level procurement in all forms, including tender-based or GEM portal-based procurement, as a mandate.
In private procurement, there are incentives for buying locally by ensuring custom duty differentials between duty charged on the import of parts versus the import of finished devices. This delivers economic benefits for private healthcare facilities that procure from local manufacturing plants. The customs duty differential may be insufficient as it is not uniformly applied to all parts used in medical devices alone. Many of these parts are used across other industries as well, diluting the economic benefits of the healthcare sector, and creating yet another roadblock to accessible and affordable care.
Another instance is the 20% rebates provided by the state governments of Gujarat and Madhya Pradesh to healthcare facilities built in non-metro/rural areas for buying MedTech products. This enables healthcare infrastructure to build-out in access-restricted geographies. Could a lower rebate be given for products on the import-approved list to ensure access to quality care in access-restricted geographies is not restricted to patients? This could potentially transfer the economic benefit to the healthcare facilities, attracting them to buy products that are manufactured locally.
Quality For India and the World
For the long-term sustainability of the MedTech industry and acceptance of Make in India globally, we need to ensure design, manufacturing, storage, and servicing for quality throughout the life cycle of the product. Harmonization of Indian and global standards and elimination of a multiplicity of regulators/regulatory requirements for products will ensure Made in India products achieves cost and quality competitiveness.
For instance, the United States and the European Union (~60% of the global market for MedTech) exempt accessories, spare parts, and components from separate quality requirements. These items are covered under respective medical device regulations/safety standards. Indian Quality Control Orders (QCOs) and Compulsory Registration Orders (CROs) from a plethora of Ministries (Ministry of Heavy Industry, MeitY, etc. do not allow such exemptions for accessories, spare parts, and components used in MedTech products manufactured in India. However, the same components, accessories and spare parts when imported along with medical equipment are exempted from such QCOs & CROs. Such an inverted compliance burden is akin to an inverted duty/tax structure, where imported devices are more favorably considered than locally manufactured ones. The multiplicity of regulations and compliance burden add costs to Indian-manufactured MedTech products, reducing the competitiveness of ‘Made in India’ MedTech products in the global markets.
Competition and Level Playing Field
India is and will continue to be one of the top 10 markets of MedTech products in the world due to ballooning NCD prevalence and a growing population. India’s natural competitive advantages in engineering capabilities, software expertise, and lower labour costs lend her an opportunity to become a significant exporter of MedTech products. As the MedTech industry in India matures, a favourable policy environment triggered by NMD policy-2023 coupled with additional PLI incentives schemes with adequate flexibilities to address market dynamics can accelerate India to become the world’s MedTech manufacturing hub.
This will truly be the bridge between Atmanirbhar and Global Leadership.
Authors – Chaitanya Sarawate, President & CEO, GE HealthCare South Asia and Managing Director, Wipro GE Healthcare
Shobha Mishra Ghosh, Director & Head – Govt. Affairs & Policy, GE HealthCare South Asia
