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Thursday, January 08, 2015

Medical Devices- expectations from Indian industry

Rajiv Nath, forum coordinator, Association of Indian Medical Device Industry (AIMED) listed the excitement and expectations in Indian Medical Times.

FDI only in Greenfield project :“The country remains heavily import dependent with nearly 70 per cent overall import dependency and in some device segments like medical electronics nearly 90 per cent. In this context, the biggest setback has been government’s decision to permit 100 per cent FDI in brownfield projects. We are not against 100 per cent FDI in greenfield projects but 100 per cent FDI in brownfield is short-sighted and will only increase the distress level of Indian medical device manufacturers by making them easy target for cherry picking by MNCs and will also defeat the very purpose of reducing import dependency or encouraging manufacturing of medical devices within the country.
“Last time, when FDI was permitted in this sector but without putting conditions to achieve the end objective i.e. encourage manufacturing within country, the whole idea got defeated as MNCs simply put up marketing and trading shops in India without creating manufacturing bases. They simply imported goods and sold it here increasing the country’s import dependency. This time too, such things are going to happen. In a letter to the Union Minister for State, Department of Commerce & Industry, Smt Nirmala Sitharaman, we have demanded a blanket ban on 100 per cent FDI in brownfield projects.
“Even for greenfield projects, there has to be a condition that at least 60 per cent of overall goods being sold by a foreign company in India have to be manufactured within the country. Unless this is done, we firmly believe that manufacturing of medical devices within the country will never take off and we will continue to be heavily import dependent.
Rationalization of Tax StructureDue to myopic import taxation policy we have a situation where import duty on raw materials and semi-finished goods (which goes into making of medical devices) is higher than import duty on finished goods. This means, it is cheaper to import medical devices rather than manufacture it in the country. So, why would anyone invest in manufacturing or continue to be manufacturer when they will never be able to match the price parity with imported items. If the government really wishes to encourage ‘Make in India’, it has to remove this anomaly at the earliest.
Domestic Preferential Public Procurement Policy: Countries such as China and US are not only leading manufacturers of medical devices but they also follow a ‘Domestic Preferential Public Procurement Policy’ whereby they give 15-20 per cent price preference to domestically manufactured goods in public procurement. India follows no such policy. We have petitioned the government through a representation to Mr V K Subburaj, Secretary, Department of Pharmaceuticals, Government of India to formulate a 15 per cent price preferential ‘Buy Indian Procurement Policy’ in Indian Public Healthcare System which will also be in sync with policies followed in countries such as US and China and will also be in line with Prime Minister Modi’s vision of ‘Make in India.’
De-clubbing of Medical Device sector from Drug and Cosmetics Sector: Currently, medical device industry in India is governed under the provisions of the Drugs & Cosmetic Act 1940 & Rules 1945 and nodal regulatory authorities are Drugs Controller General (India) and Directorate General of Health Services, Ministry of Health and Family Welfare! At present, there is no nodal or separate body for regulating or supporting medical device industry. So, this sector is nobody’s baby but everyone’s business! World over this does not happen as medical device industry is different from drugs and cosmetics. We have demanded changes in the Act and the creation of a separate regulatory authority for medical device industry. Medical device sector should never have been and should not be clubbed with drugs and cosmetics.

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