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Medical Device Manufacturing: Import and Export trends, reasons behind import dependency and Karkhana.io’s solution

Sudarshan Naik

With growing population, aging population, growing medical tourism, demand for healthcare infrastructure, and increasing health insurance penetration, there is a growing demand for medical devices in India. To meet this demand, various clusters of medical device manufacturers are present across the states in India. The past few years data shows that this growing demand is met by more imports than the local manufacturing. India is a net importer of medical devices and there are reasons behind this trend. The blog discusses the import and export trends of medical devices, reasons behind import dependency and how karkhana.io can address one of the issues. 

Import and Export Trends

Import and Export of Medical Devices

The above graph shows that the import trade of medical devices has grown from USD 2.46Bn in FY12 to USD 2.87Bn in FY16. The export trade of medical devices has grown from USD 0.78Bn in FY12 to USD 0.98Bn in FY16. The total import of medical devices is more than 75% of medical device sales in India.   

The below image show the total trade scenario in Indian Medical Devices Sector for the year 2018-2019 and 2019-2020

India's Medical Devices Trade

Imports increased from $ 5700.44 million in FY 2018-2019 to $ 5845.41 million in FY 2019-2020. Exports increased from $ 2138.14 million in FY 2018-2019 to $ 2292.6 million in FY 2019-2020. But the trade balance has remained almost unchanged. 

The two trends shown above indicate that India has high import dependency in the medical device sector.

The below image shows the import-export trends of sub-groups present in the Indian Medical Sector. 

Import, Export and Trade Balance ($ million)

The ‘Consumables & Disposables’ sector has negligible positive trade-balance while the trade balance in other sub-sectors are significantly negative. The trade deficit is high in the ‘Electronic Equipment Sector’ which is at the high end of the technology. While the ‘Consumables & Disposables’ sector is at the lower end of the technology. The trend shows that the Indian Medical Sector mostly manufactures and exports low-end technology products while it imports high-end technology products to meet its own demands. Examples of higher-end technology products are cancer diagnostics, medical imaging, ultrasonic scans, PCR technologies, etc.

There are reasons behind this low level of indigenization. Even if Indian manufacturers were capable of manufacturing high-end technology products, they couldn’t do so due to the reasons mentioned in the next section.

Reasons behind import dependency

According to a Deloitte report, the reasons are

  1. Unfavorable duty structure which makes imports cheaper than manufacturing in India.
  2. Inadequate demand for certain categories of products.
  3. Lack of comprehensive laws and enforcement mechanisms for IP protection.
  4. Absence of indigenous ‘quality certification’ authority. 
  5. Inadequate ecosystem support: The setting up of a manufacturing facility goes beyond setup, requiring an effective component supply chain in place. Currently, a major challenge for players in most segments/sub-segments is that a large part of the component supply chain is imported. 
  6. Ease of doing business: Due to complex regulatory requirements, products currently require multiple agency approvals leading to time delays.
  7. Limited availability of skilled workforce and restrictive labor laws.

Initiatives have been taken by GoI to address these issues like Make in India, 100% FDI, Draft National Medical Device Policy, Medical Device Parks, corrections in inverted duty structure, establishment of medical testing labs, voluntary scheme for certification of medical devices, etc. Even on-demand manufacturing companies like karkhana.io can address one issue i.e. inadequate ecosystem support and help the manufacturers in localization of the components manufacturing.

How Karkhana.io can solve the problem?

Once the manufacturers set up the manufacturing facility, they need to build an effective component supply chain. Setting up the component supply chain will take years. Till the component supply chain is built, karkhana.io can provide components to the manufacturers.

 Karkhana.io is India’s foremost B2B on-demand manufacturing platform. Our manufacturing capabilities encompasses 3D printing, CNC machining, injection molding, vacuum casting and sheet metal fabrication. Karkhana.io has capabilities to manufacture custom parts and components for the medical devices sector. We have spent years in creating an ecosystem of vendors and suppliers of varied manufacturing capabilities and capacities. By working with us, the manufacturer can take the advantage of working with a single vendor who can take care of all the manufacturing needs right from prototype to production. Karkhana.io can even manufacture components for the companies who have imported the entire machine. We have an expert team of design engineers and manufacturing engineers who can help in localization of components. We have capabilities to manufacture metallic and plastic components of CT Scan, MRI, PET scan, ECHO, EEG, ECG, PCR, stents, glucometers and many more.

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