Budget may unveil scheme to incentivize medical gear makers

The scheme will aim to achieve self-reliance in medical gear, reducing healthcare expenses. The quantum of financial support has not been decided yet, the people said on condition of anonymity. 

The government has been regularly discussing the scheme's inclusion in the budget, one of the two people cited above said. At a review meeting last month, Union health & chemical fertilizers minister J.P. Nadda had emphasized on upgrading domestic manufacturing of drugs & medical devices to global standards over the next three years.

"The department of pharmaceuticals is trying to understand how better we can upgrade the sector. We are trying to target newer segments of the pharmaceuticals industry with completely new schemes, and meditech sector is the future of India," said one of the two people cited above.

Queries sent to spokespersons of the department of pharmaceuticals and finance ministry remained unanswered till press time.

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Fresh proposal

Most medical devices manufactured in India are disposables like catheters, perfusion sets, extension lines, cannulas, feeding tubes, needles and syringes, as well as implants like cardiac stents, drug-eluting stents, intraocular lenses and orthopaedic implants. Government data shows India's medical equipment market was worth $11 billion in 2022, making up 1.5% of the global market. The department estimates that the sector may grow to $50 billion by 2030 with a compounded annual growth rate (CAGR) of 16.4%.

“The department of pharmaceuticals has submitted a new proposal on the meditech sector to the finance ministry for final consideration," the second person added, adding the final contours of the proposal are still being worked on.

The new scheme may take the shape of the Revamped Pharmaceuticals Technology Upgradation Assistance Scheme (RPTUAS), the people cited above said. Launched in March this year, RPTUAS aims to support the pharma industry to upgrade technologies to global standards. The scheme provides financial incentives for pharma firms with annual sales below ₹500 crore on average over the previous three years. Under the scheme, companies with average sales of ₹1 crore to less than ₹50 crore will be paid 20% of investments made in technology upgradation, those with ₹50 crore to less than ₹250 crore will be eligible for 15%, and those with ₹250 crore to less than ₹500 crore will get 10%.

Focus on new scheme

The new scheme in the works will help manufacturers to go up the value-added quality certification tree and secure global regulatory approvals faster, as well as earn greater quality credibility with Indian regulators, said Rajiv Nath, forum coordinator of the Association of Indian Medical Devices Industry (Aimed). "This strategic move is in line with the National Medical Devices Policy announced last year to make India the global manufacturing hub for medical devices. As it will be widely accessible by the MSME sector, it will hopefully pay better dividends than the PLI scheme," Nath added.

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In the interim budget for FY25, the government had set aside ₹98,461 crore for the pharmaceuticals and healthcare sector.

India is the fourth largest Asian medical devices market after Japan, China and South Korea, and ranks among the top 20 medical devices markets globally.

The medical device industry is a capital-intensive one with long gestation periods, requiring constant development and induction of new technologies. Despite recent experiences in accelerating domestic production, India's imports are largely high-value and low-volume devices, while domestic production is largely low-value and high-volume diagnostic tools. At present, 86% of India's medical gear requirements are imported. The country imported medical devices worth ₹68,885 crore in FY2324, shows Aimed data. The country exported ₹31,673 crore worth of medical devices during the same period.

On Wednesday, minister Nadda chaired a high-level meeting to review drug regulations and cosmetic & medical devices. Upscaling in the sector needs to be systems-based, focusing on highest standards of uniformity, technical upgradation and futuristic approach, the minister said at the meeting. For exports of drugs and pharmaceuticals, the system should be designed for proper intervention to maintain the quality of drugs being exported, he added.

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