India’s dependence on imported medical devices at ‘alarming’ level, industry group says

India’s dependency on imported medical devices has grown to an “alarming” level as demand increases and an unsupportive duty structure hurts domestic manufacturers, an industry group said.

Medical device imports rose by a record 41 percent to Rs 63,200 crore in 2021-22 from Rs 44,708 crore in FY21, according to the Association of Indian Medical Device Industry (AiMeD), which analysed commerce ministry data.

“It’s an alarming situation as the increase has been fivefold over a six-year period,” said Rajiv Nath, forum coordinator of AiMeD. India imported Rs 12,866 crore worth of medical devices in 2016-17, he said.

China remained the primary source of medical devices for India, with shipments from the neighboring country rising 48 percent to Rs 13,538 crore in FY22 from a year earlier, the AiMeD analysis showed.

India’s medical device market is estimated at more than $11 billion (Rs 87,752 crore), with overseas suppliers contributing over 70 percent.

Why imports are rising

India’s dependence on imported medical devices raises many concerns, experts said. They noted that as the pandemic receded, there’s been a rebound in healthcare for Covid-19 and other diseases, with super-specialty hospitals coming up and seeking the latest equipment.

AiMeD says Indian manufacturers are losing out on this opportunity to foreign counterparts – Chinese, in most cases – due to cheaper prices.

“The current basic import tariff ranges between 0 to 7.5 percent. There are many devices on which the government has imposed zero import duty, which is the main reason for the increase in imports,” Nath said.

Sunil Khetrapal, director of the Association of Healthcare Providers India, said both the government and the private sector are planning several new specialty and super-specialty hospitals, which is fuelling demand for foreign medical devices.

“Today, the world-class corporate hospital groups are building high-end infrastructure and buying high-end devices and opening India to medical tourism,” he said.

According to Ashok Patel, founder of Max Ventilators, despite the government’s efforts to drive self-reliance through production-linked incentives and the setting up of medical device parks to ramp up manufacturing of medical devices locally, there is a gap between policy intent and implementation.

“A number of medical devices including ventilators continue to be dependent on key components from outside. The value chain around components as well as full-fledged devices continues to struggle to evolve,” Patel said.

Electronics and equipment

India’s import dependency in the ‘electronics and equipment’ category of medical devices has been the highest and was worth Rs 40,649 crore in FY22. This category includes MRI machines, CT scanners, ultrasound machines, X-ray machines, cancer diagnostics, dental drills and minimally invasive surgical devices.

There are six major categories of medical devices that are imported into India – consumables, disposables, electronics and equipment, implants, IVD (in vitro diagnostics) reagents, and surgical instruments, as per the AiMeD analysis.

“The actual devices being imported include diagnostic kits, reagents, hand-held diagnostic equipment, and operating room simulations. Imports of these products constitute about 50 percent of the market,” said Khetrapal of AHPI.

Local manufacturers 

Local manufacturers of medical devices said it is cheaper to import products than to procure the raw material in India and this has led to the closure of some small and medium units. As per AiMeD, the number of domestic medical device manufacturers had gone up to 1,800 during the peak of the pandemic.

“Slowly, units started to shut down as imports from China kept on rising. Now, it is estimated that there are about 1,500 such units and many more are on the verge of closing down,” Nath said.

Himanshu Baid, managing director of Poly Medicure, said the government should have a well-defined national medical devices policy to set short, medium and long-term goals for the sector.

“The government should rationalise the inverted duty structure which has been a major reason for the country’s import dependency. The medical devices and equipment sector has three slab rates of GST – 5 percent, 12 percent, and 18 percent. This should be harmonised to a uniform rate of 12 percent,” he added.

An inverted duty structure is when tax on components exceeds the tax on finished products. This structure increases the cost of components and makes finished products cheaper.

Patient safety 

Industry leaders said the import of certain categories of medical devices in India is inevitable due to quality issues.

“The growing demand for quality healthcare and the absence of matching delivery mechanisms pose a great challenge to us and an opportunity to importers,” said Khetrapal.

Aashish Chaudhry, managing director of Aakash Healthcare Super Speciality Hospital in New Delhi, said there is a difference in the quality of products manufactured in India and those that are imported.

“Indian manufacturers have to work a lot in terms of research and producing the right models,” he said.

Price-competitive market

With limited R&D capability and an underdeveloped ancillary manufacturing ecosystem, domestic companies face challenges in making medical devices that are cost-competitive.

India remains highly dependent on imports for many types of medical devices, especially higher-end equipment such as cancer diagnostics, medical imaging, ultrasonic scans, and PCR (polymerase chain reaction) technologies. Hand-held or portable diagnostic equipment for blood sugar and blood pressure testing is also a fast-growing segment in the country.

Chaudhary said even patients respond better to imported devices, probably because of the amount of research that goes into the making of these products.

“Imported items of implants are three to five times more expensive, yet the patients, when given an option, choose the imported over locally made implants,” he said.