Medical devices manufacturing gets cabinet support

The schemes around medical devices will generate 33,750 additional jobs over a period of five years, besides substantially reducing the country’s import costs

March 21, 2020

Medical Device is considered to have the highest growth potential among all sectors in the healthcare market

The country still depends on imports of up to an extent of 85 per cent of total domestic demand for medical devices

The four medical device parks are expected to cut the manufacturing cost of medical devices in the country

The manufacturing incentive scheme is expected to attract large investments in the Indian medical device sector

The Union Cabinet, led by Prime Minister Shri Narendra Modi on March 20 approved the Promotion of Medical Device Parks scheme to build infrastructure facilities in four medical device parks with a budget allocation of US$52.6 million. The Cabinet also approved the Production Linked Incentive (PLI) scheme to promote domestic manufacturing of medical devices with a budget outlay of more than US$450 million, impacting around 25-30 manufacturers. The funding for the schemes will be for the period 2020-21 to 2024-25.

Medical Device is considered to have the highest growth potential among all sectors in the healthcare market. The Indian medical devices sector was valued at US$6.6 billion in 2018-19 and is expected to reach US$11.4 billion by 2021-22. India still depends on imports of up to an extent of 85 per cent of the total domestic demand for medical devices. Herein, the scheme will help promote medical device parks in the country in partnership with the states. A maximum grant-in-aid of US$13.2 million per park will be provided to the States.

The medical device sector suffers from the cost of manufacturing disability of around 12-15 per cent when compared with other economies. This is owing to the lack of adequate infrastructure, domestic supply chain and logistics, high cost of financing, inadequate availability of electricity, low focus on R&D and skill development, etc. Herein, the incentive scheme will boost domestic manufacturing by attracting large investments in the medical device sector. The scheme will provide incentive at 5 per cent of incremental sales over the base year 2019-20.

While the scheme on medical device parks will be implemented by a State Implementing Agency (SIA). The manufacturing incentive scheme will be implemented by a Project Management Agency (PMA) to be nominated by the Department of Pharmaceuticals. The incentive scheme will cover medical devices pertaining to – 1) Cancer care/Radiotherapy; 2) Radiology, Imaging, and Nuclear Imaging Devices; 3) Anesthetics, Cardio-Respiratory, and Renal Care; 4) All Implants including implantable electronic devices like Cochlear Implants and Pacemakers.

The four medical device parks are expected to cut the manufacturing cost of medical devices in the country. Meanwhile, the manufacturing incentive scheme is expected to attract large investments in the medical device sector, particularly in the identified target segments. The scheme will lead to expected incremental production of over US$9 billion over a period of five years. The schemes will also generate 33,750 additional jobs over a period of five years, besides substantially reducing import costs.