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Higher duties hit local mfg of medical devices |
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NEW DELHI: Prime Minister Narendra Modi has made 'Make in India' one of the thrust areas of the government, but its own taxation policies seem to push in the opposite direction when it comes to medical devices. While duties on inputs for device manufacture remain very high, making it unviable to manufacture devices in India, duties on finished goods have been steadily reduced and in some cases like cardiac stents even brought to zero. This and some other policies incentivize importing finished goods rather than manufacturing them here.
The net result is that over 75% of India's Rs 30,000 crore medical devices market is dependent on imports, mostly by multinationals that have no manufacturing facility in India. According to a government-directed study, this market is likely to grow at 15% a year, which means it could be worth over Rs 60,000 crore in five years or even Rs 1 lakh crore taking inflation into account.
A Boston Consulting Group study estimates the market would be worth about Rs 3 lakh crore by 2025. If India remains 75% dependent on imports, that would mean an import bill of over Rs 2 lakh crore.
Multinational device companies were among the first to be invited for foreign direct investment in India, but most have used the opportunity to set up 100%-owned subsidiaries only for marketing activities and not for manufacturing, stated a white paper on the medical device industry in India prepared by the Engineering Export Promotion Council under the direction of the commerce and industry ministry.
In India, the term medical device covers the entire gamut from disposable gloves and syringes to high-end machines like CT scans and robotic surgery machines.
The indigenous industry consists of over 750 firms primarily manufacturing low technology products, though a few have been making a slow transition to producing cost-effective medium-end medical devices. Just 2% are 500-crore plus companies, 3% are Rs 100 crore-500 crore companies, 5% are Rs 50 crore-100 crore companies and 20% are Rs 10 crore-50 crore companies. The bulk, 70%, are companies valued at less than Rs 10 crore.
In the disposables, consumables and surgical instruments segment of the market, Indian companies account for 50-60%. But, in all other segments indigenous companies account for barely 10-15%. MNCs like GE, Siemens and Philips also manufacture a few low-tech products in India, but these constitute less than 10% of their total Indian sales. Many MNCs have large production facilities in China and they would rather import from China and Brazil as Indian policies seem to favour imports. For instance, despite being the diabetes capital of the world with millions of diabetes patients, India is importing even simple devices like glucometers from Johnson and Johnson, Roche, Bayer and Abbott, which account for more than 95% of the glucometer market in India.
While Japan, Korea, Taiwan and many European countries have a thriving environment for small and medium-size industry, India is following the US model where MNCs dominate and grow by mergers and acquisitions. This may ultimately harm the interests of Indian consumers, warned Dr Rajiv Nath, forum coordinator of the Association of Indian Medical Device Industry (AIMED).
There are many other segments like orthopaedic implants, ICU equipment, dental implants and products and endoscopes where the import dependency is more than 90%. Though there are some serious indigenous efforts in the areas of laboratory medicine and ophthalmology, even these are said to be suffering due to their inability to compete with the MNCs due to inverted duty structures, multiple tax levies, lack of subsidies/incentives for exports like China/Brazil and the lack of marketing muscle power.
Source : timesofindia.indiatimes.com
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