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What is the News?
According to a report, Indian medical device makers are now struggling with idle capacity.
What are the issues faced by the Medical Devices sector currently?
Medical Devices Lying Idle
The Indian Medical Devices Sector had increased its production of ventilators, masks and PPE Kits to meet the demand during the Covid-19 pandemic.
For example, India used to produce just 6.24 million pieces of PPE kits per annum before Covid, but this was ramped up to 233.87 million pieces per annum. Similarly, India used to make only 3,360 ventilators per year earlier but now makes over 700,000 per year.
However, around a third of the installed capacity especially for consumables, disposables, small-ticket electronic items is lying unutilised.
Rise of Imports of Medical Devices from China
There was a 75% increase in Chinese imports in the financial year 2020-21 (FY21) as it bagged the top spot of medical devices exporters to India, overtaking the US and Germany.
The reason for the rise in Chinese imports is that several traders realised that it was cheaper to import finished products rather than critical raw materials.
Moreover, the Government cannot ban imports from China as the local industry will suffer as they are dependent on China for components.
What should the Government do to help the Medical Devices sector?
The Government of India is making efforts to boost local manufacturing through the production-linked incentive (PLI) scheme. But since local manufacturers are stuck with idle capacity, the demand to invest under the scheme would be muted.
Hence, the Government should take corrective measures to keep investors motivated and incentivised, especially for critical products by including them in the PLI scheme or through tariff protection and non-tariff measures.
Source: This post is based on the article “Nearly 33% of India’s medical devices capacity lying unused: Industry” published in Business Standard on 29th November 2021.
