Production incentive for medical devices is to be welcomed

| Updated on June 16, 2020

However, the incentive should be expanded to include testing kits, ventilators, oxygen cylinders and devices for which demand can spike all of a sudden

Amidst the pandemonium over Covid, questions over the quality and availability of medical equipment, ranging from the testing kits to protective gear, have cropped up from time to time. This has given rise to the need to be self-sufficient in the production of medical devices, a sector in which India’s imports were over ₹43,000 crore in 2018-19. India was, like much of the Covid-affected world, scrambling to import rapid antibody testing kits, only to discover that some of them were defective. Hence, the Centre’s recent efforts to enhance self-sufficiency in medical devices by providing a production-linked incentive of 5 per cent on incremental annual sale of devices made in India is well-timed. The incentive, to be in effect for five years from the current fiscal, is however limited to a handful of devices — those pertaining to cancer care, radiology and medical imaging, anaesthetics, cardiac and renal care, and implants such as pacemakers. It should be expanded to include testing kits, ventilators, oxygen cylinders and devices for which demand can spike all of a sudden. To avail themselves of these incentives, the producing firms will have to meet minimum investment and sales criteria.

The policy announcement observes that the Indian medical device market is expected to grow at a CAGR of 14.8 per cent, exceeding ₹86,000 crore in two years. India’s export of medical devices, at ₹16,300 crore in 2018-19, was up 25.3 per cent over the previous year, while imports that year were up 23.8 per cent, an indication of the growth potential of the sector. For India to develop as a major exporter of medical devices, it must establish a reputation for standards. Its image in this area is not exceptional, thanks to disclosures on the conditions of production in major pharma exporting companies. The Centre, in February this year, brought all medical devices under the regulatory ambit of the Drugs and Cosmetics Act, allowing producers a window of about three years or more to get themselves licensed — the transition period increasing with the complexity and invasiveness of the device. The transition allows concerns to invest in upgradation or sell out. However, it is not clear what the quality control protocol will be. Imports that have been certified by the authorities in the US and EU may not require clearance here. Meanwhile, the NITI Aayog has mooted, and not without merit, a separate body for the regulation of medical devices.

Any turf war between the Central Drugs Standards Control Organisation, the implementing agency for DCA, and the NITI Aayog on this score should be averted. While encouraging capacity creation, public sector presence in critical pharma and medical devices should also be considered. India can be a world leader in medical devices, provided it sorts out policy and regulatory issues.

Published on June 16, 2020

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