“Make in India” faces failure in boosting Indian medical devices industry

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The Make In India initiative has largely been a failure when it comes to medical devices where the domestic firms are rather preferring to become traders and importers instead of producers. This happens because the devastating policies cause domestic producers to import medical devices, while the government is planning to enlist India among top five medical devices manufacturing hubs in the world. This looks far-fetched as most of domestic manufacturers of the Rs 1,05,000-crore industry in India are either closing down their units or giving up manufacturing capacities to become importers and traders.

In 2018-19, imports of medical devices increased by 24 per cent to Rs 38,837 crore which remained at Rs 31,386 crore in 2017-18, Rs 28,067 crore in 2016-17, Rs 26,203 crore in 2015-16 and Rs 23,170 crore in 2014-15 while the Indian market has been growing at 10-12 per cent per annum for the last five years. India’s medical devices industry is heavily dominated by multinationals such as GE, J&J, Philips, Wipro, Abbott, Siemens, Baxtar and Fresenius, that makes up approximately 75-80 per cent of the Indian market. Only four domestic manufacturers have revenues over Rs 500 crore a year namely Trivitron, Transasia Biomedicals, Hindustan Syringes & Medical Devices and PolyMedicure.

“Many Indian manufacturers have reconciled with the fact that government is seemingly unwilling to correct the low tariff structure prevalent since 2010. They have adapted to a new business strategy of importing rather than making in India as it is convenient and cheaper,” said Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD).

Even the multinational companies that hold around 80% of the domestic market of medical devices in India have not established new factories in India and are only focusing on trading arms. This is despite the ‘Make in India’ schemes and incentives in addition to having free access to the Indian market with negligible customs duties varying only from 0-7.5 per cent.

Association of Indian Medical Device Industry asserts that there were at least 25-30 thermometre manufacturing units in India until a few years ago, but now there is none. Similarly, for decades in existence there were thriving surgical equipment manufacturing hubs in Jalandhar in Punjab and in Barampur in West Bengal with hundreds of units. However, it seems none are now manufacturing there.

It is essential for the Indian government, as GSK Velu put it, to provide a level playing field with entry barriers, more reforms, and supportive measures to make India a global medical device manufacturing hub and reduce the current import dependency of 70-90 per cent.

The government should ideally increase reforms and introduce supportive measures in order to make India a global medical device manufacturing hub and to give a level playing field for domestic manufacturers. In spite of repeated assurances from the BJP government, Union Finance Minister Nirmala Sitharaman’s Budget 2019-20 completely overlooked the medical devices sector. Indian government did increase the manufacture in mobile phones and other electronics by increasing the custom duty on their import by 15-20 percent, there is no reason why medical devices industry is not given the same opportunity.

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