Back to Growth: Interview with Rajiv Nath, MD, Hindustan Syringes and Medical Devices
1. How do you see the major trends that you witnessed during Covid-19 in your sector pan out in 2021?
The Covid-19 pandemic situation was initially dreadfully challenging in India with a huge population and highly import dependent medical devices sector.
The Government of India through its flagship “Make in India” initiative relied heavily on the Indian manufacturers to meet the rising demand of essential healthcare equipment’s for the country, pushing the Indian medical devices sector to become self-reliant.
COVID-19 crisis has shown that Indian medical devices sector can rise to the challenge. When imports got disrupted, specific devices detailed with quantified production shortages and a focused Inter-Ministry Group coordinating with domestic manufacturers via AiMeD had addressed production bottlenecks and challenges so that not only capacity got utilized but also ramped up rapidly.
We recognized that the government interventions helped the medical devices industry scale up production during the pandemic. We enjoyed an unprecedented teamwork and rapid proactive communication from NPPA, who became a facilitator instead of a regulator and Department of Pharma, DPIIT, Invest India and MSME Ministry as they set up help desks to address production bottlenecks of all medical devices especially, those related to COVID viz Sanitizers, Masks, Ventilators, Gloves and COVID IVD Test Kits.
‘Make in India’ got a major boost with biggies like Maruti, Mahindra, Kalyaani, Tata Motors, Hyundai starting to make medical devices in collaboration with AiMeD members
The Covid-19 situation has brought in a revolution in the Indian medical system’s digital evolution and healthcare facilities. Homecare, tele- consultation and tele-medicines are a few expansions that hospitals will provide in increasing numbers in the future.
From bringing in innovative new products to improving the existing ones, Indian Medtech industry is gaining traction for bringing unique propositions to address some of the challenges faced by the healthcare system during the pandemic.
2. What could be your strategy to boost aggregate demand in the sector going ahead into 2021?
AiMeD recommended the following for boosting the indigenous manufacturing of Indian medical devices in 2021:
Predictable Tariff Protection Policy: We seek Nominal Tariff Protection for Devices being made in the country and a predictable tariff policy so if capacity is added by a manufacturer, there is assured nominal protection. To promote domestic medical device industry that will subsequently reduce India's heavy reliance on import, the Current Basic Import Tariff of 0-7.5% needs to be 15% for medical device (the Bound Rate under WTO is 40% duty) and on their components to be at least 5% and next year 7.5% as a PMP Make in India enabler. Concessional duty on raw material may be retained at 2.5% for now, for next 3 Years. After GST, imported devices are cheaper by 11% and Indian manufacturers are challenged to compete with Chinese imports in government tenders even for basic products like syringes, thermometers, examination gloves and blood collection tubes.
The onset of Covid-19 exposed the soft underbelly of healthcare insecurity of India with huge over-dependence on imports and the nation had to prepare to build the health care and medical devices manufacturing infrastructure and inventory of vital Covid related medical devices like ventilator, masks, thermometer and PPE kits.
Consumers are not gainers from low duties if they have to pay the misleading, excessively artificially inflated MRP labeled medical devices and have exposure to inconsistent prices that are linked to a volatile currency exchange rate. If consumers' interest needs to be protected, capping MRP at 4-5 times the import landed price is more effective than turning a blind eye to MRP as high as 20-30 times the imports landed price.
Additionally, the import of preowned equipment needs to be curbed and separate law of medical devices expedited.
Indian imports of Rs. 42000 crore that account for 85% of the medical device market are a healthcare security risk that needs to be addressed. It is also a huge opportunity for Make in India.
3. Do you think the sector space in India could be lucrative for foreign investors around the world given the global scenario?
Indian medical device manufacturing industry is at the cusp of a great opportunity. Manufacturing growth in China has slowed considerably. Due to geopolitical reasons, global investors have begun to show renewed interest in India. Our government has also seized the initiative and in a series of measures has reformed the country’s foreign investment policy to allow higher levels of investment from abroad in diverse sectors. In fact India has permitted 100 percent Foreign Direct Investment (FDI) through automatic route in medical device sector. As a result, India has become one of the most open economies in the world and rightly positioned to attract large-scale foreign investments. The Indian government has already chalked out plans intending to remove all roadblocks and offer tailor-made solutions to attract investment to make India a manufacturing hub for medical devices.
Under initiatives like Make in India, several state governments have taken up the onus of setting up medical device manufacturing parks in their respective states and have got the approval from the Government of India to do so. There would be six medical devices manufacturing clusters in the country in states like Andhra Pradesh, Kerala, Telangana, Tamil Nadu, Maharashtra, and Sikkim. These clusters would provide a huge boost to domestic manufacturing of high-end medical devices at a lower cost and significantly enhance job creation. The Software Technology Parks of India (STPI) soft launched MedTech - A Center of Excellence in Lucknow to promote research and startups in the fields of medical electronics and health informatics. The medtech software park is reportedly aiming for Rs. 10,000 crore market creation.
There would be no global tender enquiry up to Rs. 200 crore worth of tenders. The government has promulgated “Public Procurement (Preference to Make in India, Order (PPO) 2017” to encourage domestic manufacturing in India. Under this, there are three classes of suppliers i.e., Class-I Local Supplier, Class-II and Non-local Supplier. As per prescribed minimum local content, the supplier can participate / given preference in public procurement policies of governments, both central as well as state. So, this will provide protected and preferential market access to overseas investors who put up factories in India.
4. Your take on how sector specific reforms (IBC, PLI, Bilateral Netting etc.) by the government helped the sector thrive and be resilient during the Covid-19 period?
AiMeD on behalf of the Indian medical devices industry wholeheartedly thank the government for the following schemes and initiatives for promotion of the domestic manufacturing of medical devices in the country announced during the Covid-19 period.
The 85% import dependent medical devices industry is finally having the needed focus and interest is being taken by Government of India to making medical devices in India, a rewarding experience. The PLI scheme by DOP is designed to attract investors in select 4 high technology segments of medical devices where import dependence is very high. AiMeD is in discussions with various state governments to avail DOP’s scheme to set up medical devices parks and infrastructure and to strengthen existing clusters to translate our vision to make India to be one of Top 5 manufacturing hubs of medical devices.
5. What is your analysis and opinion of the Union Budget, as announced on February 1, 2021 for your sector?
Sometimes a crisis helps to come out with bolder decisions. Major fillip to healthcare through PM Atmanirbhar Swastha Bharat Yojna, PLI scheme, health infra allocation, focus on new and emerging diseases and health labs will surely address major gaps.
Finally, we may have something to help accelerate medical devices manufacturing as a 'Make in India' enabler so that Indian healthcare security concerns are addressed.
Finance Minister Nirmala Sitharaman, sharing a holistic vision of healthcare, announced:
- 137% increase in health budget
- PM Aatmanirbhar Swastha Bharat to be launched with an outlay of 64,180 crore over 6 years; huge intervention in India's healthcare journey.
- Pneumococcal vaccine to be rolled out across the country to avert 50,000 child deaths annually. 35,000 crore for vaccine has been given and has committed to provide more.
- Support for wellness centres
- Setting up health labs
- Critical care hospital blocs in districts
- Strengthening disease control surveillance and strengthening of NCDC
- One health centre for WHO regional office
Though the FM has highlighted the need to support manufacturing sector to be part of global supply chains and need for it to grow on double digit sustained basis, we, the Indian medical device industry noticeed that there are no changes in custom duty as done for other sectors and are very hopeful that the fine print of the Union Budget would have possibly acted upon our recommendations. Supportive policies are needed so that Indian medical devices industry can make quality healthcare accessible and affordable for common masses, aim to place India among the Top 5 medical devices manufacturing hubs worldwide.