COVID-19 revealed true potential of the Indian medical devices industry
Rajiv Nath, Founder and Forum Coordinator of AiMeD, opines that the government interventions helped the medical devices industry scale up production during the pandemic. During this period, domestic manufacturers were able to supply to the world in addition to meeting greater domestic demand, thereby demonstrating the potential of Indian medical device industry. He opines that day has arrived to remove the digressive policies of encouraging and relying heavily on imports to meet India’s needs for medical devices.
IBT: What is the trend in growth of the Indian medical device sector over the past few years? Which are the products and destination markets which have driven the export growth?
Rajiv Nath: Indian medical device manufacturing industry is at the cusp of a great opportunity. Manufacturing growth in China has been challenged with many countries resisting to buy Chinese medical devices. Another opportunity is the current Indian Public Procurement Policy. Due to geopolitical reasons global investors have begun to show renewed interest in India.
Our government has also seized the initiative and in a series of measures has reformed the country’s foreign investment policy to allow higher levels of investment from abroad in diverse sectors. As a result, India has become one of the most open economies in the world and rightly positioned to attract large-scale foreign investments. The Indian government with Invest India spearheading the initiative has already chalked out plans, intending to remove all roadblocks and offer tailor-made solutions to attract investment to make India a manufacturing hub for medical devices.
Prime Minister Narendra Modi’s call for self-reliance i.e., Atma Nirbhar Bharat will not only see India emerging as a manufacturing superpower but will also strengthen India to vie for being the 2nd factory in the world for Medical Devices & a dependable manufacturer of quality products in global supply chains. We have shown the ability and capability of Indian entrepreneurs to Make in India when we have the support of the government.
The Government of India relied heavily on Indian manufacturers to meet the rising demand of essential healthcare equipment for the country. This pushed the Indian medical devices sector to become self-reliant, especially for the essential 39 COVID-19 Medical Devices.
Government interventions helped the medical devices industry scale up production during the pandemic. We enjoyed an unprecedented teamwork and rapid proactive communication from NPPA who became a facilitator instead of a Regulator & Dept. of Pharma, DPIIT, Invest India and MSME Ministry as they set up help desks to address production bottlenecks of all medical devices, especially those related to COVID viz Sanitizers, Masks, Ventilators, Gloves & COVID IVD Test Kits.
Before the outbreak of Covid-19, there were only 20 firms manufacturing 62 lakh PPEs per year. But within two-three months, the number of manufacturers listed with AiMeD increased to 140 firms with 26 crore annual capacity.
“The number of Indian firms manufacturing ventilator went up from 8 to 21, mask manufacturers from 21 to 73, swab manufacturers from 0 to 5 and sanitiser manufacturers from 35 to 49. The number of Indian firms manufacturing RNA extraction kit listed with AiMeD before the outbreak of COVID-19 was 0 but today 16 Indian firms listed with AiMeD are manufacturing 265.4 million pcs/annum.”
Similarly, the number of Indian firms manufacturing Diagnostic Kit (PCR Kit) went from 0 to 8 manufacturing more than 1.47 billion pcs/annum, Covid-19 Rapid Diagnostic Test Kit from 0 to 3 manufacturing 46.5 million pcs/annum and VTM from 0 to 10 manufacturing 3.77 billion pcs/annum listed with AiMeD.
IBT: To what extent and in which products has India achieved competitiveness in the global market? And what factors are negatively impacting this competitiveness from expanding to more segments?
Rajiv Nath: India is one of the leading exporters in the world for the following medical products:
- I.V. Cannulae
- Orthopaedic or fracture appliances
- Surgical gloves
- Syringes with/without needles
- Catheters & stents
- Surgical blades
- Suture & suture needles
Indian strengths of precision engineering, fair business practices, an eye for honoring engineering tolerance, low labor costs and nimble entrepreneurship are a given. However, the Department of Pharmaceuticals has recognised the following factors that negatively effect competitiveness of indigenous manufacturers by a disability of 12-15%:
- Lack of adequate infrastructure, supply chain and logistics;
- High cost of finance;
- Inadequate availability and cost of quality power;
- Limited design capabilities; and
- Low focus on R&D and skill development.
IBT: What is the extent of barriers in terms of tariffs and non tariff measures that affect the performance of Indian exports? Which are the markets where India faces these barriers most stringently?
Rajiv Nath: Before we can discuss external overseas tariff & non-tariff barriers, we need to address internal lack of tariff barriers and needless non tariff export barriers internally.
Internally we seek Nominal Tariff Protection for devices being made in the country and a predictable tariff policy, so if capacity is added by a manufacturer there is assured nominal protection. To promote domestic medical device industry that will subsequently reduce India’s heavy reliance on import, the current Basic Import Tariff of 0-7.5% needs to be 15% for medical devices (the Bound Rate under WTO is 40% duty) and on their components to be at least 5% & next year 7.5% as a PMP Make in India Enabler.
Additionally, internally we face a unique non-tariff barrier of lack of availability of Free Sales Certificate from MOH&FW and CDSCO, without which capable and globally competitive Indian exporters are unable to register in markets like China, Argentina, Mexico etc.
Externally, India exporters faces tariff barriers of up to 20% for BRICS countries as follows :
|Import Duty on Medical Devices (HS Code 9018) in BRICS Countries|
|Products/ Countries||Brazil||Russia||India||China||South Africa|
|Medical Devices (HS Code 9018)||14%||up to 15%||Up to 7.50%||3.3% – 17%||up to 20%|
Additionally, medical device exporters face non-tariff barriers of needing to seek regulatory approvals and registration in many countries. This not only delays the process, but is very expensive and increasingly complex, whether for export to Nigeria, Ethiopia, Brazil, Mexico, USA or Europe.
IBT: What are the key reasons for India’s import dependence on high end medical instruments? Why are Indian manufacturers not able to manufacture these devices?
Rajiv Nath: Some of the reasons why India’s high dependence on imports of medical devices are as follows :
- Negligible Basic Custom Duties of 0% to 7.5% on import of medical devices.
- Almost 50 types of regulatory compliances in the form of license / registration / approvals for domestic manufacturing of medical devices as against 1 or 2 minor regulatory compliances for import.
- No market access barriers in India for import from countries which imposes such trade barriers against Indian exports of medical devices.
- No quality checking of 2nd hand import/ dumping of medical instruments.
- Low focus on R&D and skill development
IBT: What should be the road map for India to become a competitive manufacturer of medical devices in the long term? What kind of government support and assistance is required at the ground level for this?
Rajiv Nath: We recommend the following reforms to give encouragement & boost manufacturers to provide quality care in India :
- Preferential Procurement for Domestic Manufacturers based on World Bank Preferential Pricing norms.
- Prefer Procurement for ICMED / ISO Certified Manufacturers to boost quality.
- Prefer Procurement for Design India Certified Manufacturers to boost indigenous development.
- Timely payment against government supplies.
- Penal provision against hospitals that keep exclusionary compliance Clause of USFDA Certification as 3rd country regulatory approval.
- Separate regulatory framework, independent of drugs for Indian medical devices.
- Capping of MRP over Import Landed Price/ ex- Factory Price to protect ethical manufacturers.
We should be happy that the government has acknowledged that the domestic players have grown large, achieved scale and are able to succeed in supplying global markets. This has been amply demonstrated during COVID-19, when Indian manufacturers met local demand with good quality affordable products and kept their offices and factories working all days practically round the clock as cost of imports rocketed and supply went for a toss due to disrupted logistics.
Furthermore, domestic manufacturers were able to supply to the world in addition to meeting greater domestic demand, thereby demonstrating that the Indian medical device industry has come of age. The day has arrived to remove the digressive policies of encouraging and relying heavily on imports to meet India’s needs for medical devices.
Other countries like the USA, China, Russia, South Africa, Saudi Arabia, Iran, Indonesia, Uganda etc have clearly stated preferential procurement policies to support indigenous manufacturing. Even World Bank encourages this by supporting a 15 % price preference for any indigenous products made in any country for any tender being financed by World Bank/ADB etc.
Government needs to focus on Indian entrepreneurs and help them grow to be globally competitive. The fence sitting competing MNCs will invest when they will start losing market dominance and wish to also avail the competitive advantage created for those who make in India eg – under the PLI scheme, PPO or PMP (Phased manufacturing plan) – initiatives that AiMeD’s Make in India passionate members are thankful for.
Rajiv Nath is the Founder and Forum Coordinator of AiMeD. He has undertaken many initiatives for establishing a collaborative framework with various government departments and media to bring to their attention issues affecting the industry and drawing investments in India as part of the endeavor to make the country among top 5 global manufacturing hubs of medical devices. He is also Managing Director of Hindustan Syringes & Medical Devices Ltd. Views expressed are personal.