With a collaborative and proactive approach, the Indian medical devices industry is set to witness a large-scale revolution with best-in class products and manufacturing facilities.
Image Courtesy: Google Images
Image Courtesy: Google Images
Medical Electronics
The Open Economy
India has become one of the most open economies in the world where, 100% FDI is allowed under the automatic route for both brownfield and greenfield setups for medical devices industry (20th in world ranking) and pharmaceutical industry (one of top eight sectors of India attracting FDI). Both these industries consists of large multinationals as well as small and medium enterprises (SMEs) growing at an unprecedented scale in India.
Global Investment
Access to affordable HIV treatment from India is one of the greatest success stories in medicine where India supplies over 50% of global demand for various low-cost vaccines. The cost of manufacturing in India is approximately 33 per cent lower than that of the US making it a suitable marketplace for investors to invest more in the country. The increasing FDI inflows is a reflection of the firm belief by global investors that India will lead as one of the major growth engines coupled with a steady spate of market reforms. The pharma sector is well poised and leveraging many opportunities that COVID-19 has created.
Demand for foreign goods
For manufacturers, demand comes from local consumption or exports. The Indian medical device is driven by 75-80% imports from countries such as US, China and Germany. Imports of medical devices are a negative demand as domestic purchasing power is diverted to foreign goods. Converting negative demand to positive demand is the key, as successfully done in the policy of mobile phones and consumer electronics—in mobile phones, a nominal customs duty of 15-20% transformed the sector from 60 million handsets in 2014 to 290 million in 2018. The negative demand of medical devices can similarly be converted to positive demand.
Make In India
This will also help ‘Make in India’, as already proven in stents and knee implants, and lead to demand creation for domestic manufacturing. Creating an ecosystem for ‘making in India’ is to consider nurturing Indian manufacturing champions who will lead other mid-size and small-size manufacturers to follow. The Covid-19 pandemic has taught us to be self-reliant and self-sufficient first, and not seek solutions outside the country.
| CAGR | Growth ( expected) | FDI (US$) *During 2020 | Export (US$) *During 2020 | |||
| Rate | 2020 | 2025 | ||||
| Medical Devices | 14.8% | 18% | 11bn | 65bn | 2.2bn | 2.1bn |
| Pharma industry | 9.5% | 9.5% | 18.3bn | 75bn | 17bn | 16.28bn |