Neglect continues toward Indian medical devices industry

All India Medical Devices (AiMeD) expresses deep anguish over the continued neglect of the domestic medical devices manufacturers by the government. Despite umpteen reminders, the recently announced Union Budget too has not heeded to our suggestions on extending tax and non-tax protection to our industry.

In other words, sunrise sector of medical devices faces sunset year with 24 percent sharp rise in imports if the government does not take corrective measures to promote indigenous manufacturing. This is indeed very sad, especially when the government is taking credit for resounding success of its flagship policy dispensation of Make in India, envisioned to promote higher GDP growth and employment generation. On the contrary, the government seems to be telling the domestic medical devices manufacturers Not to Make in India as it is promoting large scale imports of medical devices.

After the goods and services tax (GST) on imported medical devices became cheaper by 11 percent, the basic import tariff stands in the range of nil-to-7.5 percent for most medical devices. Before the GST regime, imported medical devices attracted excise duty and special additional duty, over and above the import duty. After GST, only import duty and GST are levied. However, since one gets input credit in the GST regime, the effective taxation reduces.

While the government is touting the success of Make in India program, the beleaguered medical devices domestic industry is focusing on exports as they continue to lose market share to imports on account of lack of adequate tariff protection, lack of non-tariff import barriers and unfair unethical market that favors perceived higher quality of familiar MNC brands with attractive trade margins and higher MRP versus unfamiliar unknown new Indian brands which even if lower priced against European or American or Japanese brands, if not Chinese, do not adequately induce retailers and hospitals to push their products nor do they have the deep pockets to match the sales promotion, marketing budgets to sponsor events of celebrity doctors.

Even as medical devices makers in America allege the regulatory environment in India has hindered the growth of their export, the data suggests otherwise. India imports around 80 per cent of its medical devices requirement and a fourth of that comes from the US. The top five Countries that India imports Medical Devices from are USA (21 percent), Germany (14percent),Singapore (11percent), China (10percent), and Netherlands (7percent).

We request the government
• To encourage employment and Make in India of Medical Devices and address 70-90 percent import dependency by a predictive nominal tariff protection policy as done for mobile phones to ensure a vibrant domestic industry & competitiveness and price stability driven by competing domestic players;
• To protect consumers from exploitatively high MRP in Medical Devices by rationalized price controls and aid ethical marketing;
• To Regulate all Medical Devices under a Patients’ Safety Medical Devices Law to protect patients and aid responsible manufacturing; and
• To incentivize quality in healthcare products in public healthcare procurements by preferential pricing for Q1 e.g.; ICMED (QCI’s Indian Certification for Medical Devices) instead of L1 (lowest price) to ensure patients access acceptable quality.

We stress these are vital and strategic steps required to meet the health-for-all national agenda of PM Modi and aligned to the Health Policy 2017, to make quality healthcare accessible and affordable for common masses and to enable placing India among the top five medical devices manufacturing hubs worldwide and end the 80-90 percent import dependence forced upon us and an ever increasing import bill of over `38,837 crore! Pseudo manufacturing and unethical marketing is harming consumers and disallowing manufacturing to succeed in India by well-meaning investors. We can repeat the success story of mobile phones by replicating the same strategies.