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CII advices caution in implementing Preferential Market Access for medical equipment

sectors-pharmaceuticals-iconThe Confederation of Indian Industry (CII), India’s biggest association of companies, has urged the government of India not to implement a Preferential Market Access for medical equipment without first setting the groundwork for promoting a components and ancillary industry in the country.

It said that merely mandating local sourcing norms without helping the local industry set up manufacturing will not yield results.

CII’s comments came on the government’s move to implement a Preferential Market Access (PMA) Policy for medical equipment and device. Under such policies, the government will give special consideration for goods produced within the country when procuring for its needs. Such policies have been in place in telecom and IT sector for several years.

However, CII said that it would not be very useful to set apart quotas for domestic manufacturers in pharma if domestic manufacturing in India is difficult to be carried out.

“Without the availability of indigenous components, the PMA policy will not yield any results, as already seen in the electronics and IT hardware sector since the last four years. Before the implementation of PMA policy in medical devices and equipment sector, there is a need to properly analyze the components manufacturing capabilities in India,” said Himanshu Baid, Chairman of CII Medical Technology Department.

CII emphasized that the manufactur­ing business case in India is quite challenging.
The Confederation of Indian Industry (CII), India’s biggest association of companies, has urged the government of India not to implement a Preferential Market Access for medical equipment without first setting the groundwork for promoting a components and ancillary industry in the country.

CII’s comments came on the government’s move to implement a Preferential Market Access (PMA) Policy for medical equipment and device. Under such policies, the government will give special consideration for goods produced within the country when procuring for its needs. Such policies have been in place in telecom and IT sector for several years.

However, CII said that it would not be very useful to set apart quotas for domestic manufacturers in pharma if domestic manufacturing in India is difficult to be carried out.

“Without the availability of indigenous components, the PMA policy will not yield any results, as already seen in the electronics and IT hardware sector since the last four years. Before the implementation of PMA policy in medical devices and equipment sector, there is a need to properly analyze the components manufacturing capabilities in India,” said Himanshu Baid, Chairman of CII Medical Technology Department.

CII emphasized that the manufactur­ing business case in India is quite challenging.

“While the labour costs are lower in the country, the capital investment and productivity of the labour are critical lim­iting factors to the manufacturing business case. Combined with approval delays, this makes the manufacturing environment quite challenging for entrepreneurs,” it said.

“Ac­cess to low-cost capital through soft loans, subsidized land, and assured power & water supply combined with tax incentives and single-window clearance, would certainly build a stronger business case in India,” said Pavan Choudary, Co-Chairman, CII Medical Technology Department.

Instead, CII said the government should build up the com­ponents ecosystem by attracting big global medical technology companies to India.

“This, in turn, will en­hance local capabilities, enable Indian companies to get access to compo­nents and greatly enhance the local manu­facturing capability,” it said.

Once the ancillary industry is established, there will be significant value addition in finished medical equipment and device, it added.
It also suggested that the process of setting up manu­facturing facilities needs to be streamlined by designating medical technology hubs all over the country with the right infrastructure in place to support complex medical technology manufacturing.

CII said the government should establish medical technology hubs in each zone (north, south, east and west). It also suggested putting in place manufacturing incentives like tax support and low-cost funding (5% lower rate than the bank lending rates) to spur investments and make the busi­ness case attractive and offering power at concessional tariff.

“India is already a large producer of disposables and consumables, and export incentives are available for some products… The industry needs to get exposed to the learnings of evolving quality standards from countries which have had a head-start in innovations in this space. This will help improve the overall quality standards in India.

“There are several misconceptions being spread about the medical technology industry amongst stakeholders. Therefore, it is important to build a positive environment which makes a business case and opens doors for investors to start manufacturing in this sector, thus paving the way for the ‘Make in India’ initiative.”

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