Stimulus to help India be among Top 5 medical devices manufacturing hubs

KEY HIGHLIGHTS

• Likely price preference for domestic manufacturers
• Medical Devices Law to spur local manufacturing
• May cap trade margins and ban second hand imports
• The Rs 1 lakh crore plus medical devices industry is now dominated by MNCs
• India imports Rs 40,000 crore worth medical equipment a year

The Rs 20 lakh crore stimulus package announced by Prime Minister Narendra Modi today with a vision to make India self-reliant in future, is likely to include sweeping measures that will place India among the top five manufacturing hubs globally for medical devices and provide a level-playing field for domestic manufacturers.

The likely announcements are related to price preference for domestic manufacturers, a new medical devices law for manufacturing and regulation of medical devices, capping of margins for imported medical devices, ban or restriction on second hand medical device imports and a mechanism to ensure domestic manufacturers are paid promptly to ensure cash flow.

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In his speech, the PM mentioned India was not making PPE kits before Covid-19 pandemic and now the country is making over 2 lakh PPE kits a day. Similarly, from less than 5,500 ventilators in February, now about 15 manufacturers are making over 40,000 ventilators to address the Covid-19 pandemic.

"In our recent interactions with government, we have represented in detail what all needs to be done to make India self-reliant in medical devices and hope the announcements will address the issues we raised", says Rajiv Nath, Forum Co-ordinator, Association of Indian Medical Devices Industry(AiMED).

Most domestic manufacturers in the Rs 1.05 lakh crore medical devices industry (at patient level selling price) were facing closure since they could not compete with China and imports from other countries. Though India has an estimated 900-1,000 domestic medical device manufacturers, only 15 companies have a turnover of above Rs 200 crore. Of the Rs 38,837 crore imports in 2018-19, 66 per cent or Rs 25,624 crore worth of medical devices were in the electronics and equipment, a lion's share belonging to multinational companies.

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About 90 per cent of the Rs 16,000 crore worth of medical electronics products are imported every year. Customs duty on such products are 0-7.5 per cent and the industry demand is to increase this to 15 per cent. Now 40 per cent of medical electronic products imported into India are pre-owned and the demand is to ban such imports.

Similarly, many MSMEs in the sector are not paid for three months to a year after supplies, whereas importers are paid promptly in government purchases. Another issue is imported medical devices are preferred in most government purchases based on lowest quoted tenders, which help Chinese products to bag orders. Industry expects a preferential pricing of 15-40 per cent domestic content to solve such anomalies.

Another demand is to regulate the MRP of medical devices. An imported infrared thermometer costs about Rs 6,000-10,000 in the black market currently due to shortage. A comprehensive medical devices law can solve most of the issues with the sector, they hope.

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