Government should promote an innovation culture in India to promote indigenous industry

Jatin Mahajan, Secretary, Association of Diagnostic Manufacturers of India (ADMI) and Managing Director, J Mitra & Company emphasises that we expect the government to lay down a more conducive environment for the growth of the medtech industry by addressing few challenges in the forthcoming budget

The diagnostics-medical devices industry has proved its capabilities & determination, and outperformed all expectations in the past two years. Medtech’s contribution in India had emerged from the shadows.

India is the global centre for frugal medical device engineering. However, most hi-tech innovative products and technology originate from a well-developed ecosystem, and US + Europe + Japan accounts for about 85 per cent of the roughly $220 billion revenues. Therefore, the government should promote an innovation culture in India to promote indigenous industry and reduce our dependence on imports.

We expect the government to lay down a more conducive environment for the growth of the medtech industry by addressing the following challenges in the forthcoming budget.

Catalyse availability of a substantial supplier base for raw material

Growth in the manufacturing of sophisticated devices depends on the availability of a domestic supplier market for parts and components, which is ruefully inadequate. An indigenous supply base for critical components will not only build reliability in the supply chain but also reduce the input costs for device manufacturers, making the indigenous devices more price competitive. The government should take measures to extend its support to reduce the cost burden on the manufacturers through initiatives such as –

• Provide concessional power tariffs, cheaper access to land for setting up manufacturing units
• Fast-pace the creation of common infrastructure facilities that include –
  • Component Testing Centre/ESDM/PCB/Sensor’s facility; Electromagnetic interference & Electromagnetic Compatibility Centre; Biomaterial/Biocompatibility/Accelerated Aging Testing Centres; Radiation Testing Centre
  • Medical grade moulding/milling/machining/tooling centre; 3D designing and printing for medical grade products
  • Solid waste management/ETP/STP/Electronic waste management unit
  • Common Warehouse & Logistics facility, etc.
• Providing lower interest rates to manufacturers during the initial years of building the supplier ecosystem

The government’s procurement policy does not favour Indian manufacturers (no incentive during procurement for domestic companies)

• • The government is a significant buyer of medical devices in India with its medical colleges and public healthcare centres. However, public procurement policies for medical devices do not seem to provide preferential market access to locally manufactured devices. The procurements in most cases during the pandemic were more in favour of foreign-made products with questionable antecedents. There should be a systematic review of local capabilities and allowing exemptions only for products with insufficient local manufacturing capacity

Regulatory structure

The Medical Devices Rules have comprehensive regulatory conditions for the import, manufacture, sale, and distribution of medical devices based on risk-based criteria. The current structure involving regulatory authorities across the centre & states has further scope for harmonisation of processes & timelines to improve the overall predictability levels in these processes and to attract global players in the industry. Lack of predictability in policies acts as a barrier to operating in the Indian market

The placement of medical devices, drugs and cosmetics under the same regulatory authority is a significant anomaly that needs to be corrected.

Promote an innovation ecosystem

Medical devices is an innovation-driven industry where new products may take 5-10 years to reach a market-ready stage. “Make in India” has been a significant trigger to promote manufacturing activities in India. “Innovate in India” is a natural precursor to “Make in India” for the medical device industry and hence needs equivalent focus and support to realise the dream of making India a Global Medical Device Hub.

Creation of a skilled talent pool

Skill availability is critical if the government is to realise its vision for the medical devices sector in India. While the Government has launched some courses through NIPERs, substantial efforts are needed to ensure India finds its rightful place among global medical device hubs. Globally, medical device research is primarily carried out in academic institutions, followed by the designing and prototyping of medical devices by corporates. Therefore, a robust Industry-Academia collaboration model is required to promote the same culture in India

Duty structure rationalisation to make local devices price-competitive

The import duty on most finished devices ranges from zero to 7.5 per cent, the lowest amongst BRIC countries. This subject was touched on in Budget 2022, but the actions were highly inadequate. The duties on critical components and finished devices must be reviewed and structured so that locally manufactured devices can be priced competitively in the market after adding applicable duties and taxes.

Harmonise quality standards to match global standards

The Bureau of Indian Standards should focus on harmonising the Indian Standards with globally acceptable quality standards so that domestic device manufacturers attain global competitiveness in the crowded market. ICMED is a step in the right direction, but the pace is slow, and it is not a de facto implementation. Deploying different quality standards for the domestic market, especially vertical standards, needs to be critically examined as India aims to be a net exporter of medical devices in the long run. Having harmonised standards for domestic and export markets can help indigenously manufactured medical devices compete against their global counterparts and make the quality of indigenous instruments more acceptable in the worldwide market. Moreover, it will enable global companies to form partnerships with Indian manufacturers to produce devices for local and international markets.

India has the potential to capture a 12-15 per cent market share in the next 25 years if these industry challenges are quickly addressed.