Swadeshi Makes For a Perfect Anti-Trump Pitch; Problem is that 80% Medical Devices are Imported

Prime minister Narendra Modi’ clarion call – once again – to buy local in the wake of the Trump tariff misadventure made for wonderful television, soothing nationalist outrage over the US President's tirade. Soon enough, Uttar Pradesh chief minister Yogi Adityanath followed through, linking Swadeshi to stemming the flow of “terror funding”.

Swadeshi for the Indian psyche is an emotive word with deep resonance, more so perhaps in the month of August when all of this has providently begun to unfold. But it is no longer the 1940s, the world is flat and India for all its COVID-linked atmanirbharta (self reliance) posturing is heavily reliant on imports for sophisticated medical devices, with domestic manufacturing capacity limited to high volume low value items such as catheters, masks and surgical gloves.

As a manufacturing destination India only caters to 1.5% of the global market

The government’s own data show that India is among the top 20 markets for medical devices; but as a manufacturing destination it only caters to 1.5% of the global market with 80% of domestic medical devices being imported. While a call to buy local does cater to the current mood of Trump-triggered defiance and knee jerk nationalism, it ignores the hard reality that were Indian hospitals, including the premier government ones such as the All India Institute of Medical Sciences to start trying to procure local and only local, healthcare would collapse.

A small pilot in going Swadeshi with scientific and medical equipment played out over the last few years when researchers in top government institutions suffered the consequences of being tied to the government e marketplace (GeM), grappling with sub standard equipment and poor maintenance. After pushback at the highest levels, the ministry of finance was recently forced to ease that requirement with vice-chancellors and directors of institutes being authorised to approve global tender enquiries of up to Rs. 200 crore.

India’s ambitions for the medical device sector, as outlined in the approach paper on the National Medical Devices Policy released by the department of pharmaceuticals in 2022 are big; by 2047 the country aims to be one of the top five global manufacturing hubs in terms of values and technology for medical devices. India allowed 100% Foreign Direct Investment (FDI) through the automatic route in medical devices way back in 2014.

There are multiple schemes and government procurement conditions that are designed to encourage local manufacturers, including the norm that there has to be a minimum local content in a non-proprietary product for it to be eligible for the government tender process.

Local needs more than vocal support

But local manufacturing in India still has some ground to cover. Not even the pandemic could provide a meaningful, sustained momentum to the domestic medical devices industry. There was, in the early days of the pandemic, a clamour for ventilators which spurred multiple unrelated industries including car makers to jump onto the bandwagon and the controversial PM Cares fund was used to subsidise some of them.

In the end, hospitals were saddled with ventilators that were either defective or came much after their need was over and in some states manufacturers and the central government faced court ire over the faulty products. All in all it was hardly a poster outing for the Made in India brand!

On paper the proposition to be able to access a 1.4 billion market seems lucrative enough for foreign medical device behemoths to invest in India; but in practice procurement policies that lay emphasis on the lowest bidder and also “Indianness” of the product such as insistence on local content calculation and regulatory speedbreakers such as registration of the manufacturer of every individual imported item that goes into the device and the need for each of them to adhere to local standards, complicates matters.

This essentially means that the promised market access is merely conditional not assured, no matter what the scale of investment and the regulatory bottlenecks make the experience less than ideal.

There is little recognition of work done in software development and development of indigenously developed artificial intelligence solutions that power an increasing number of devices manufactured by multinational corporations as “local content”, further tilting the scales against foreign investment. The production-linked incentive schemes do not incentivise medical device manufacturers enough; what may, is a clear government commitment to increase healthcare expenditure.

The recent trend of clubbing expenditures under heads such as sanitation, drinking water to push the actual less than 2% GDP health spend to almost double that amount and inclusion of alternative medicine practitioners in the calculation of doctor-patient ratio to reach a number higher than the ideal World health Organisation norm, can generate breathlessly positive media coverage but is unlikely to deceive global medical device powerhouses.

India as a healthcare market has severe affordability issues

The fact remains that India as a healthcare market has severe affordability issues and will continue to be heavily import dependent in the coming years given the lack of local capacity. So we cannot afford to only allay concerns of local manufacturers in the name of promoting Indian brands.

As the largest single buyer, unless the government lays out a clear healthcare targets and procurement roadmap for medical devices and a level playing field that the Swadeshi call essentially precludes, average Indians, particularly the insurance less “missing middle” would continue to lose out on affordable access to latest medical technology.

Abantika Ghosh is a journalist and public policy professional. She posts on X @abantika77. Views personal.

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