Confederation of Indian Industry (CII) has submitted several key recommendations to the Department of Pharmaceuticals (DoP) with regards to the infrastructure support required to boost manufacturing in the medical technology sector in line with the government’s “Make in India” mission.
Regarding implementation of the Preferential Market Access (PMA) Policy in medical equipment and device, the industry members recommended promoting the components and ancillary industry without which “Making in India” is not possible in this technology-driven sector.
“Without the availability of indigenous components, the PMA policy will not yield any results, as already seen in the electronics and IT hardware sector since the last four years,” said Himanshu Baid, the chairman of CII Medical Technology Department.
“Before the implementation of PMA policy in medical devices and equipment sector, there is a need to properly analyze the components manufacturing capabilities in India,” Baid added.
The CII has emphasized the importance of recognizing the fact that the manufacturing business case in India is quite challenging.
While the labour costs are lower in the country, the capital investment and productivity of the labour are critical limiting factors to the manufacturing business case. Combined with approval delays, this makes the manufacturing environment quite challenging for entrepreneurs.
“Access to low-cost capital through soft loans, subsidized land, and assured power and water supply combined with tax incentives and single-window clearance, would certainly build a stronger business case in India,” said Pavan Choudary, the co-chairman of CII Medical Technology Department.
The recommendations are as follows:
Attracting big global medical technology companies to India will help create a base which will then build up the components ecosystem.
This, in turn, will enhance local capabilities, enable Indian companies to get access to components and greatly enhance the local manufacturing capability.
Once the ancillary industry is established, there will be significant value addition in finished medical equipment and device.
To begin with, only MSME / SME industry components can be given preference in the PMA policy.
The process of setting up manufacturing facilities needs to be streamlined by designating medical technology hubs all over the country with the right infrastructure in place to support complex medical technology manufacturing.
Establish medical technology hubs in each zone (north, south, east and west).
Manufacturing incentives like tax support and low-cost funding (five percent lower rate than the bank lending rates) to spur investments and make the business case attractive.
Concessional power tariff in manufacturing hubs.
Subsidised land prices for setting up medical devices industry in medical technology hubs.
Inverted duty structure should be corrected. Customs import duty on raw materials should be lower than finished goods.
Four percent exports incentives for the sector should be given.
The three-year market standing required for new manufacturing units to participate in Government tenders should be done away with.
India is already a large producer of disposables and consumables in India, and export incentives are available for some products. The CII has emphasised the need for further capacity building in this segment and focus on quality enhancement for further reduction in imports.
The industry needs to get exposed to the learning’s of evolving quality standards from countries which have had a head-start in innovations in this space. This will help improve the overall quality standards in India.
There are several misconceptions being spread about the medical technology industry amongst stakeholders. Therefore, it is important to build a positive environment which makes a business case and opens doors for investors to start manufacturing in this sector, thus paving the way for the ‘Make in India’ initiative.