Making India the med device makers/innovator of the world needs an image shift from low cost to high value. Does the nation, and individual med devices companies, have the financial resources to invest in innovation, faced with dwindling exports, as it plays catch up to other contenders to this crown?
President Trump’s Liberation Day tariffs have plunged India’s medical device sector into a funk, as it grapples with the impact of the 26 per cent reciprocal tariffs on US exports. A twin worry is non-tariff barriers (NTBs), like regulatory hurdles related to registration and inspection charges etc. Over the last decade, India has also expanded its own version of NBTs like Quality Control Orders (QCOs) for reasons ranging from consumer safety, public health, and national security.
The tariff axe could fall again in the future so it’s best that med device companies take proactive action. This includes diversifying their export base, and moving up the value chain from low-value high volume consumables to high-value medical devices. This is similar to the growth strategy of India’s pharmaceutical sector, which moved from plain vanilla generics to speciality, difficult to make generics and biologics, where the entry barriers curtail competition and keep margins healthier. The med devices sector needs to simultaneously work on policymakers to reduce NTBs.
Proactively upping our game to a more value-added positioning is a must, given that there are already signs that President Trump is not yet done. After exempting pharma exports in the first round, media reports have quoted President Trump saying that this is “under review right now”, “pharma tariffs are going to come in at levels you haven’t really seen before….”
The tit-for-tat tariff regime will spur more unethical practices and unleash a race to the bottom. For instance, Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD), reveals that the biggest fear for India’s medical device exporters is the routing of exports to countries with lower tariffs (like the UK and UAE which have 10 per cent tariffs). This is reportedly a common tactic of India’s competitor China.
The US has levied heavier tariffs on medical devices imported from other countries (China: 34 per cent, Vietnam: 46 per cent, Switzerland: 31 per cent). But this difference is not necessarily in India’s favour. As Himanshu Baid, managing director, Poly Medicure comments, while India may seemingly gain a marginal price advantage over China (8 per cent) in certain low-risk, high-volume consumables, the real impact may not be significant if our prices were higher than 15 per cent and the impact has to be further studied compared to other competing nations.
Besides the tariff challenges, NTBs are considerable. Nath points out that while regulatory hurdles in the US are steep, with FDA approval costs ranging from $9,280 to over $540,000, US exporters face relatively minimal costs when entering India. Therefore addressing these imbalances through bilateral collaboration is crucial, states Nath. He harks back to Prime Minister Modi’s diktat that India must prioritise healthcare security by strengthening domestic manufacturing and reducing dependency on foreign markets.
Global medtech companies operating in India have also protested against the tariffs. Pavan Choudary, Chairman, Medical Technology Association of India (MTaI), which represents global players, believes that the US administration’s decision to impose reciprocal tariffs “does not reflect informed policymaking”, reasoning that history has repeatedly shown that “protectionist measures often do more harm than good, with the burden ultimately falling on consumers and patients in both countries.”
In fact, tariffs on medical device imports could achieve exactly the opposite effect of their initial intent. As Choudary points out, “Economies prosper when they focus on their strengths, leveraging comparative advantages to enhance global trade. However, by disrupting supply chains through excessive tariffs, the US risks not only reducing efficiency but also increasing healthcare costs for its own citizens. The decisions of reciprocal tariff on Indian imports stem from trade imbalances and perceived non-tariff barriers in sectors like medical devices and is intended to protect domestic industries but could inadvertently stifle the spirit of free and fair trade that benefits both nations. Instead of escalating trade restrictions, both countries should move to a more strategic, non protectionist and cooperative approach that would serve long-term economic interests.”
Policy makers have always used trade as a tool. For instance, India has used QCOs to control cross border trade. As Ranjeet Mahtani, Partner, Dhruva Advisors points out, there has been a sharp rise in QCOs in the past decade. In 2014 there were only 14 QCOs covering 106 products, compared to approximately 187 QCOs covering 769 products notified for compulsory BIS certification by early 2025.
Among other examples, Mahtani cites The Medical and Surgical Gloves (Quality Control) Order, 2024 which was notified (through the Department of Chemicals & Petrochemicals and Department of Pharmaceuticals) to clamp down on low-quality surgical gloves in the Indian market. The driver for this move was the discovery of substandard glove imports flooding in from Malaysia, Thailand, Vietnam, and China.
There is no doubt that the threat of US reciprocal tariffs has already galvanised India’s policymakers.The Government of India had announced the Export Promotion Council for Medical Devices (EPCMD) in April 2023. But the council became functional by onboarding members just a few days before the US tariffs were announced. The council has its work cut out: it will have to quickly deal with higher reciprocal tariffs from the US, which will drastically reduce export revenues from the biggest market.
Therefore the focus will have to be on exploring new export destinations for Made in India medical devices as well as working at the policy level to scale back the tariffs. Both AiMed and MTaI have requested Government of India’s support in bilateral negotiations for a more balanced approach to tariffs and regulatory policies.
Moving from low risk-high volume medical devices/ consumables to high risk-low volume medical devices is therefore of critical importance. Making India the med device maker/ innovator of the world needs an image shift from low cost to high value. Does the nation, and individual med devices companies, have the financial resources to invest in innovation, faced with dwindling exports, as it plays catch up to other contenders to this crown? Could India focus on niches like frugal medtech innovation? And is there any other choice?
VIVEKA ROYCHOWDHURY, Editor
viveka.r@expressindia.com
viveka.roy3@gmail.com