Govt's New MedTech Scheme Aims to Boost Sector to $20 Billion

The government has launched a new scheme to boost the medical technology (MedTech) sector, which will incentivize domestic manufacturers to produce final products and raw materials in the country. The scheme, with an outlay of Rs 500 crore over three years, aims to expand the sector to $20 billion, up from the current $14 billion.

Experts say that this new scheme is expected to trump the existing Performance-Linked Incentive (PLI) scheme introduced in FY21, which mostly benefited large multinational companies. The new scheme will enable medium, small, and micro enterprises to compete with imported products and venture into new markets globally.

"A lot of domestic manufacturers are dependent on imported components as their raw material," said head of another medical devices association. "The scheme will lead to backward integration where manufacturers can now start making these components within the country."

The scheme is divided into five parts, including strengthening existing infrastructure, reducing import dependence, capacity building and skills development, support for clinical studies, and an overall promotion scheme.

According to experts, India relies 70% on imports for medical devices, but the recent PLI scheme has brought it down sharply. However, there's still large scope to reduce imports further, which will also reduce the cost of medical devices as margins on imported products are higher compared to domestic manufacturers.

"The scheme will enable local manufacturers to get into long-term contracts with potential buyers," said Rajiv Nath, forum coordinator at Association of Indian Medical Device Industry (AiMeD). "Currently, they cannot make long-term commitments due to supply chain issues and currency fluctuations. Once these manufacturers can start making devices locally, they will have price stability, and their volume of business will go up."

Experts estimate that the cost of medical devices will come down by 5-7% with this scheme in place. The local manufacturers stand to gain substantially as they can now get into long-term contracts with potential buyers.

"This new scheme provides a clear direction from the government and is expected to take our industry to the next level," said Pavan Choudary, chairman at Medical Technology Association of India (MTaI).