Nobody can fault the Narendra Modi government’s intention when it comes to galvanising the manufacturing ecosystem in the country. Soon after assuming power, the government made its intention clear by announcing the ambitious Make-in-India initiative. The medical devices industry was particularly enthused as it was chosen as one of the flotilla-leaders to lead the mission. Rightly so, because the size of the medical devices business is close to $10 billion (Rs 65,000 crore), but we are a hugely import-dependent country.
By any measure, the medical devices sector is big. But more than the size, what matters in a country like India where a majority of people are in low-income bracket is cheap but reliable healthcare products, whether it be medicines or medical devices, to ensure healthcare security of the nation. The natural corollary to this should have been to leverage this situation to our advantage and nurture an ecosystem for creating a flourishing domestic pharmaceutical and medical devices industry. But we only partly succeeded in this mission. India managed to emerge as a major pharma manufacturing and exporting country because we streamlined and strengthened our legislations and regulatory framework in tune with our domestic requirements and pursued our own path when it came to nurturing pharma. We also resisted any attempt to be influenced or browbeaten by pharma multinationals when it came to scripting our own IPR or patent policies.
Unfortunately, similar wisdom was not applied to the medical devices sector. The main reason being the failure to make a simple but critical distinction between medicines and medical devices. In no other major country, medical devices and medicines are governed by the same set of laws or people. But to our own peril, India chose to overlook this critical distinction for inexplicable reasons. Thus, the medical devices industry continues to be governed by the Drugs and Cosmetics Act, 1940. There also continues a remarkable resistance to any suggestion to change this absurd status quo! Little wonder, today, India’s import dependency for medical devices is close to 70%, while in the electronic medical devices segment, it is over 90%. Meanwhile, the closure of domestic units has become routine.
It’s not that there have been no consultations with the industry to rectify the situation, but the narrative remains the same. Also, the suggestion of broadening the name of the Department of Pharmaceuticals to Department of Pharmaceuticals & Medical Devices has not found any support. Similarly, from being in the first five focus list of Make-in-India, medical devices disappeared when the list was expanded to 25. So, instead of carving a distinct identity, it was again subsumed under the pharma list. A taskforce was also set up under the Department of Pharmaceuticals to boost manufacturing of medical devices, and after spirited consultations, brainstorming between government representatives and the industry on what’s needed to make Indian manufacturers competitive, it presented its recommendations in April 2015 and published a draft policy in June 2015. But there has been no final policy on the sector, even after 18 months.
The feeling one increasingly gets is that the status quo protection remains the primary objective even as the vested interests of the importers’ lobby blocks and delays reforms that could make India Inc competitive. Headline management appears to be the overriding consideration of the decision-makers. What else would explain the hurried announcement of 100% FDI even in brownfield medical device manufacturing projects, despite reasoned and vocal opposition from domestic medical devices industry? In fact, the opposition of the Association of Indian Medical Device Industry to this move was interpreted as routine rant, but we maintain that 100% FDI in brownfield is a bad move as it can kill the few remaining healthy domestic medical devices companies or make them extremely vulnerable for takeovers, without any concomitant benefit to Make-in-India.
Make-in-India cannot and must not be seen as making India attractive only to foreign manufactures and that too at the cost of domestic ones. You can’t have a red carpet for foreign guests and red tape for struggling domestic manufacturers.
If we are serious about making Make-in-India a success, then we need to understand that piecemeal reforms will not work. From EXIM duty rationalisation to ensuring a separate set of legislations and regulatory framework, medical devices sector needs to be looked afresh to galvanise domestic manufacturing.
Indian companies will play a far bigger role in Make-in-India than anyone else, but we need to be supported in improving our competitiveness, while ensuring ease of doing business. If we don’t nurture our own medical devices industry, then we will be losing a humongous opportunity, and at risk will be India’s healthcare security and exploitation of poor Indian consumers. If we want to emerge as a global manufacturing hub, then we must take urgent remedial measures.
Source: financialexpress.com