Budget 2022 MedTech: Need to extend price advantage to local manufacturers

There is a need for accelerating the Government’s intent of providing impetus to local manufacturing and facilitating easy access to global quality medical devices for patients across the country.

According to a Pharma Bureau and NITI Aayog report, India currently has an 86% reliance on medical device imports.

By Anish Bafna

India has made significant strides in healthcare delivery over the last few years. It has also been one of the largest sectors in terms of employment and revenue and continues to expand at a rapid pace. While the COVID pandemic brought in its wake several unfavourable consequences, it did provide the healthcare sector with a significant opportunity to accelerate innovation and re-invent itself.

The healthcare sector has always been at the forefront of innovation. However COVID-19 has accelerated several current and developing healthcare trends, including the convergence of life sciences and healthcare, fast evolving digital health technology, new talent and service delivery models, and clinical innovation. As a result, the sector is swiftly transforming to meet these new challenges. 

The lessons of the pandemic emphasize that investing in health is no longer just an option but an absolute necessity. Societies and economies can only be stable, equitable, thriving, and peaceful if no one is left behind. The upcoming budget has provided the sector with an opportunity to prioritize and implement structural changes that benefit the population.

The Indian Med Devices sector has played an indispensable role during the last couple of years at the forefront of the pandemic; however, there is a significant gap between the current demand and supply of medical devices in the country, which presents a substantial opportunity for device manufacturers in India. Moreover, in line with the Government’s vision of building an ‘Atmanirbhar Bharat’ to bring Indian technology onto a global platform, strategic R&D investments and innovation need to be incentivized among domestic players.

With the appropriate support from Government this year, healthcare providers will continue to sustain the momentum in the right direction towards Atmanirbhar Bharat. Hence, there is a need for accelerating the Government’s intent of providing impetus to local manufacturing and facilitating easy access to global quality medical devices for patients across the country.

At present, many medical device manufacturers (domestic and international) are chasing this massive under penetration of medical devices in India as a significant growth opportunity. Therefore, medical device companies should develop India as a manufacturing hub for domestic and international markets, undertake India-based innovation combined with indigenous manufacturing, collaborate across the ‘Make in India’ and ‘Innovate in India’ schemes, and produce low to medium technology products to cater to the underpenetrated domestic markets. 

As per a survey by ASSOCHAM, experts say that healthcare would continue to flourish and receive the boost as the industry seeks to increase outlays in the Union Budget of 2022. Revisions to the inverted duty structure will provide the necessary incentive for local manufacturers to produce locally. This, along with production-linked incentives, will help improve the country’s access to excellent medical innovations and boost India’s export competitiveness in this industry.

Providing additional capital subsidies will help increase the manufacturing capacity while also generating employment. Additionally, there is a need to extend a price advantage to local manufacturers when it comes to public procurement and provide them with preferential market access to make them more competitive. 

In addition, increased export incentives under the recently introduced Remission of Duties and Taxes on Export Products Scheme (RoDTEP), rationalization of Custom Duty, rollback of the Health Cess on Imports of Medtech Products, and amendment of the SEZ Act to allow SEZ MedTech manufacturers to sell their products in the domestic market have also become the need of the hour. Furthermore, easing single-window clearances for government permits for local enterprises, reimbursements for costs associated with product registrations in other countries, and exempting exported products from price controls would all contribute to a stronger push for exports.

There is a need for accelerating the Government’s intent of providing impetus to local manufacturing and facilitating easy access to global quality medical devices for patients across the country. India currently has a high reliance on medical device imports. Today, import duties on certain Medical devices are lower than those of the raw materials used to make them. This makes it more attractive to import the finished product rather than to manufacture it locally, forming a significant barrier for homegrown businesses. While the efforts towards self-reliance are in place, the larger picture for India as a Medtech hub is only plausible by eradicating operational challenges through a supportive regulatory framework, maintaining international quality standard products, R&D infrastructure & capability and building skilled talent in the med-devices sector.

It is imperative that policymakers reconsider several measures for the overall recovery of the economy in view of the aftermath of the pandemic while also building healthcare system resilience and strengthening the healthcare infrastructure along with the total capacity for delivery. As a result, the Union Budget is expected to include provisions that will accelerate growth and allow the sector to attain its full potential.

(The author is CEO & MD, Healthium Medtech Limited. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)

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