The medical devices industry is one of the key markets in the Indian healthcare sector and it has witnessed an unparalleled growth since the last decade. Current trends indicate an even greater potential in the coming years. According to the Global Data estimates, the Indian medical devices market was valued at approximately $13.12bn in 2016 and is forecasted to be worth $18.84bn by 2020. Availability of advanced medical technology, increasing affordability and penetration of private insurance, promotion of medical tourism by the government and rapidly permeating chains of corporate hospitals are the major factors driving the growth of the medical devices sector in the country.
Despite the tremendous potential, the Indian medical devices market is hindered by a few headwinds such as lack of comprehensive regulatory framework, high import dependency, inverted duty structure and lack of tax incentives to support local manufacturing.
Since 2005, the Government of India has been in the process of aligning the inadequate regulatory framework within the medical devices sector. In 2015, the government formed a task force, which proposed to exclude medical devices from the definition of ‘drugs’ and to form an independent regulatory body for medical devices. A transparent regulatory and taxation regime will improve the scope of producing cost-effective and high quality equipment and devices domestically.
In recent years, the Indian government has introduced initiatives such as Make in India Campaign and 100 percent Foreign Direct Investment (FDI) inflow through automated routes to attract investment and stimulate domestic manufacturing. The amount of FDI inflow to medical and surgical appliances increased by $568.55mn during 2012-2016. The import duty on certain medical devices has been raised, by the customs department, from 5 percent to 7.5 percent to promote domestic manufacturing.
With a transparent regulatory system, increasing FDI inflow and a rational taxation system, the medical device manufacturers are likely to explore domestic opportunities for manufacturing high-end medical devices with low cost of production.