Vivek Tiwari, Founder and CEO, Medikabazaar, elaborates on how government measures along with certain reforms can transform the medical devices market in India
With the Make in India initiative all set to progress, India is looking forward to tremendous growth opportunities in nearly all industries including the healthcare sector. Development trends over the last decade indicate even greater potential in the coming years. Conducive policies for encouraging FDI, joint ventures, tax benefits have influenced the Indian market. The Indian healthcare industry is already expecting a huge growth, almost up to $280 billion by 2025. One of the high growth potential markets within this industry is the medical devices segment. The medical devices segment in India was evaluated at around $6.3 billion in 2013, contributing only around 7-8 per cent of the total healthcare market in India. However, it is expecting an unprecedented growth of around $50 billion by 2025 increasing its contribution to almost 17-18 per cent. India is a fast growing market for medical devices. Based on the figures, the medical devices segment is recording a compound annual growth rate of 21 per cent.
The government is actively taking into consideration several reforms to develop the market by regulating the unorganised medical supplies market and bringing transparency in the industry. It has already approved 100 per cent FDI allowance in medical devices which will change the outlook of the industry for the better.
The absence of a consistent and organised framework and lack of initiatives and funding in the past did not allow the medical devices sector to flourish to its full potential. However, the changes in FDI policy will definitely go a long way to improve the medical devices sector, but there are a bunch of other barriers that could hinder foreign investors from manufacturing and investing in India. High tax rates imposed on domestic manufacturers as compared to the low amount of taxes levied on imported medical supplies seems unappealing to foreign investors. It is one of the key reasons why foreign firms choose to access India’s medical market without establishing their direct presence and instead set up their manufacturing units in neighbouring countries and export these devices into India.
Regardless of the challenges that India faces, it offers numerous advantages such as low labour cost, high level of technical expertise, funding aids from governments to boost the development of the medical devices sector in India. These benefits have made India one of the most recommended destinations for outsourcing the manufacturing services of medical supplies. With constantly changing technology, more and more multinational as well as domestic manufacturers are looking at modifying and customising their products based on specific requirements of different countries. Keeping this in mind, one can easily comment that the medical devices segment is only likely to grow in the coming years.
India is termed as the world’s capital of coronary heart disease and diabetes. Apart from this, factors like growing population, change in the disposable income, increasing diseases and growing awareness among people to focus on health, attribute to the growth of medical devices industry in India.
Availability of low-cost production of medical devices coupled with international quality standards marks the evolution of India as the most attractive production hub for leading medical devices manufacturers.