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An emerging opportunity for MedTech in India

Himanshu Baid | Updated on: Dec 30, 2020

A call for Atmanirbhar Bharat is just the right momentum for local manufacturing in a world dependent on imports.

The Covid-19 pandemic situation was initially challenging in India with a dense population and highly import dependent Indian medical devices sector. Pushing the Indian medical devices sector to become self-reliant or Atmanirbhar Bharat, the Government of India through its flagship “Make in India” initiative relied heavily on the Indian manufacturers to meet the surged demand of essential healthcare equipment.

The Prime Minister’s call for Atmanirbhar Bharat (self-reliant India), is just the right step for our domestic manufacturing. A self-reliant India would mean the country reducing its dependence on imports by focusing on ‘Make in India’. Self-reliance means strengthening the country's competitive power in the long run. The natural evolution of any economy has been from an agricultural state to an industrialized nation to further becoming a service dominated nation. Atmanirbhar Bharat can help us regain the lost ground of industrialisation.

The MedTech industry is also highly import dependent on other countries for raw materials and now is the right time to challenge this arrangement, as companies are looking for alternative manufacturing hubs. India could be their preferred choice, provided we are able to offer a conducive environment. A conducive business climate with simplified land and labor laws, better infrastructure and logistics, and single window clearances can enable India to develop a robust manufacturing ecosystem. This will also help attract foreign capital, latest technology, create jobs and boost our exports. Skill and Scale should be the primary focus to be both quality and cost competitive and serve a global customer base. Huge scope exists in MedTech sector, not only to be self-reliant but also capture a considerable share of the global supply chain.

Lately recognising the potential of the medical devices sector, the Indian government has introduced various new policy measures and other initiatives keeping in mind the needs of domestic manufacturers. In order to nurture innovation as the focal point of this industry’s growth and expansion, a strong funding mechanism is one of the most crucial things to be considered. This can be possible with government’s support or in a public-private model, capital subsidies, tax exemptions in medical devices parks. Common platforms shared by different innovation-centric companies such as shared raw material supplier base, testing services, shared infrastructure etc., could also help promote domestic manufacturing.

Government needs to undertake more reforms for Indian Industry to play a key role in the global supply chain and be self-reliant. Many of the capital-intensive equipment & other components being imported, can only be made at scale by Indian manufacturers, if they are given high degree of policy certainty as they require high upfront investments.

The manufacturers are not able to reach economies of scale as the manpower and electricity cost of manufacturing the components in the country is high. To decrease the input costs of manufacturing products, there is need for the Government to provide infrastructure and logistic support to enable manufacturers reduce the cost of inputs. The medical device industry also seeks tax incentives.

The imperative to change the prevalent circumstances requires a robust strategy, a stable policy environment and a well-advised comprehensive plan. The need of the hour for med-tech industry is to closely work in collaboration with policy makers to revive the provision of healthcare in the context of the economic, demographic and social transformations across the globe.

Under Make in India initiative, several state governments have taken up the onus of setting up medical device manufacturing parks in their respective states. These clusters would enable domestic manufacturing of high-end medical devices at a lower cost and significantly enhance job creation.

Due to the high GST rate, it becomes more advantageous to import the equipment than manufacturing the same in the country. The medical equipment manufacturers have been demanding to reduce the current GST rate on medical devices to 5 per cent. If the government begins to incentivise high-end medical equipment manufacturers in order to promote the production of these devices in the country, it will further boost the morale of such manufacturers.

With a futuristic and collaborative approach, India will be poised to exponentially grow its medical devices sector to its full potential not only to improve standards of healthcare in India but also to emerge as a trusted partner to the world for healthcare transformation.

Lastly, the roadmap should focus on innovation and research & development as a strong pillar of building India’s best-in-class manufacturing ecosystem. I am sure India can emerge as a significant medical device manufacturer and become a factory for the World like the Pharma Industry.

(The writer is the Managing Director at Poly Medicure Ltd)

Published on December 30, 2020
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