Medical devices sector needs incentives to enhance innovation

26 February, 2016

It will be enriching to see the government present a growth oriented budget this year. We wish for a policy review to encourage production and R&D of medical devices in India.  

What we’re discussing privately and publicly is a budget blueprint for the future which creates jobs, educates our children and provides affordable healthcare for all Indians. All of this is possible only though ‘Make in India’, for the 1.2 billion people in the country. To achieve this ‘Make in India’ policy should make necessary structural and fiscal changes to enable Indian medical device and IVD industry to compete with well entrenched MNCs in the Indian market that is worth billions of dollars. The changes made in the duty structure for the medical devices are welcome but they do not address the problems faced by the Indian IVD industry. The current duty structure for IVD industry encourages import of IVD reagents; it does not encourage domestic manufacturing. 

The value of import is estimated to be thousands of crores in IVD diagnostics category, and there is absolutely no rationale to have such huge import dependence ‎in this segment as inputs/parent industry for IVD reagents is the pharmaceutical industry. For example, at present India’s demand for IVD (in vitro diagnostics) kits/strips/tubes is largely met through imports and the quantum of imports is as high as Rs 2,000 crore and MNCs are the major suppliers of IVD diagnostics reagents with no manufacturing presence in India. If we make ‘manufacturing attractive’ by bringing the different customs code numbers into one category ‘IVD reagents’ with finished goods at a duty of 29 per cent and raw materials/components import only by licensed manufactures at 2.5 per cent duty (on actual user condition), then the manufacturing will become viable in this segment. We hope the budget will address this issue. 

The budget should focus to remove the interpretation used by customs and excise departments following different methods. There have been issues of additional excise duty being demanded for joint venture manufacturing companies in India putting hindrance on manufacturing efforts in the country compared with imports.

Relaxing import duties is the right direction to promote Make in India in the highly import dependent medical devices industry. We hope our request for ‘buy India’, increased funding for R&D, special subsidies and concessions to domestic companies are also addressed in the upcoming budget. 

Budget should bring standardised clinical practices in healthcare. Care should be taken to keep the domestic companies of Indian origin viable and sustainable to ensure access and affordability to a larger section of Indian population.

In a complex applied industry like medical devices, the eco system for research and development is extremely important and hence there is an urgent requirement for a re-look at policies concerning R‎&D in this segment. There is no single body governing and promoting R&D in the medical devices and technology segment with DBT/DST/ICMR/DCGI/NIB/AERB, etc having their own policies and procedures without any joint mechanism to address the needs of this industry more effectively.

It will be nice to form a nodal funding agency with participation by all government agencies to fund, monitor and encourage innovation and R‎&D in the medical devices and technology segment.

The healthcare industry will want the government to spend more on healthcare as in other countries. An increase in healthcare spending from 1.3 per cent to 2.5 per cent of the GDP will be a welcome step.

We are expecting the government to look at medical technology as a vital sector and promote Indian manufacturing by removing inverse duty structure, providing fiscal incentives for local innovation and manufacturing initiatives, offering proper incentives for exports from India and creating a medical devices unit under department of pharmaceuticals to promote local innovation/manufacturing in this import dependent industry.

GSK Velu is chairman and managing director of Trivitron Healthcare.


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Medical devices sector needs incentives to enhance innovation

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