India’s domestic medical device industry remains highly fragmented, with most firms operating on a small or medium scale and lacking the infrastructure and capital needed to compete globally. Unlike China, India does not provide super deductions for Research and Development, limiting incentives for innovation. While the sector is poised for transformation, the shift from import dependence to innovation leadership will require systemic reforms.
When President Donald Trump announced sweeping tariffs on pharmaceutical imports, threatening duties of up to 100 % on branded or patented drugs (unless the company is building U.S. manufacturing capacity). The move sent shockwaves across global healthcare supply chains. Medical devices were not part of that specific proposal, but the move underscored the risks of rising trade protectionism in healthcare.
For India, the irony is sharp: while it is the world’s pharmacy, exporting low-cost generics, it remains import-dependent for about 70–80 % of its medical devices, with the U.S. and China among its major suppliers. This dependence makes hospitals and patients vulnerable when trade tensions flare, as global tariff shocks translate into higher domestic costs.
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A conservative estimate suggests that India’s imports of medical devices from the U.S. and China alone amount to nearly ₹30,000 crore. The irony deepens here, despite being home to one of the world’s largest patient populations, India relies heavily on external sources for advanced healthcare technology. TheRise analyzes Ministry of Commerce and Industry trade statistics from the past five years to understand India’s dependence on foreign suppliers for critical equipment such as blood glucose strips, dental implants, EEG and EMG machines, and catheters.
Dependency of High-End Medical Electrical Equipment
With rising global supply chain insecurities, India remains heavily dependent on imports of high-end medical equipment, such as EEG and EMG machines, which account for 43% of its medical device imports from the U.S. and China alone. These machines, Electroencephalogram (EEG) and Electromyography (EMG) are critical for diagnosing neurological and neuromuscular disorders.
Beyond hardware, the diagnostic software integrated into EEG and EMG machines often transmits patient data to cloud servers or company-owned platforms, potentially creating privacy and cybersecurity risks. This reliance on foreign suppliers not only exposes India to supply chain vulnerabilities but also raises strategic concerns about sensitive health data being processed or stored outside the country.
Dependency of Basic Medical Devices
India has the largest diabetes population in the world, yet over 45 percent of its total diabetes-related imports come from the USA and China. Over the last five years, these imports have cost the country more than US $95.6 million—expenses that are ultimately passed on to patients through higher treatment costs. As a result, households in India continue to bear a heavy financial burden, with Out-of-Pocket Expenditure (OOPE) accounting for 50–52% of their total health spending. In contrast, OOPE stands much lower in countries like France (8–9%), Thailand (10–11%), and Japan (12–13%).
China has been a dominant global supplier of medical devices and raw materials, largely due to its aggressive and well-coordinated government subsidies. These subsidies span across the entire value chain—from research and development to manufacturing, export logistics, and domestic procurement. One of the most impactful policies is the super deduction on Research and Development expenses, allowing companies to deduct up to 200% of their research costs from taxable income. This incentivizes innovation and rapid product development.
Additionally, Chinese medical device firms benefit from direct financial grants, low-interest loans from state-owned banks, and fast-track VAT refunds, all of which reduce operational costs and improve liquidity. The government has also invested heavily in industrial clusters, offering subsidized land, shared infrastructure, and streamlined logistics.
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Export incentives further enhance global competitiveness, while strategic initiatives like “Made in China 2025” set clear targets for domestic production of high-end devices. China’s public procurement policies favour local manufacturers, ensuring sustained demand and scale. These measures, combined with a robust digital health ecosystem and leadership in AI-driven MedTech patents, make China a preferred supplier for many countries. Their exports range from high-end medical devices to basics like Dental implants and aligners.
India’s dependency is further amplified by the dominance of established foreign medical device companies. Giants like GE HealthCare (U.S.), Siemens Healthineers (Germany), Philips (Netherlands), and Medtronic (Ireland/U.S.) command significant market share in India due to their advanced technology, strong global certifications, and trusted brand reputations. This reliance is not only limited to high-end, technologically advanced devices but also extends to basic medical disposables such as catheters.
Basic devices like catheters, primarily used to transfer fluids into or out of the body, remain heavily dependent on imports from the U.S. India has imported catheters worth approximately US $80 million over the past five years. With growing tariff threats and rising supply chain vulnerabilities, this dependency has become a matter of concern, highlighting the need for India to achieve self-reliance in these devices.
Indian Scenario
In recent times, the Indian healthcare startup ecosystem has expanded beyond telehealth and e-pharmacies. Startups like Transcath Medical, Leelavathy Medical Devices Company (L MED), and Medevis Rubplast are driving India’s medical transformation. Today, the focus includes digital health infrastructure, AI-driven diagnostics, remote and robotic surgery, personalized precision medicine, and advanced treatments.
However, India still lags. Domestic manufacturers struggle to compete with multinational corporations that benefit from economies of scale, integrated supply chains, and global innovation networks. Compounding this is the inverted duty structure in India, where import duties on medical devices, including the basic customs duty (BCD), range from 7.5% to 10% for most devices. This often results in higher tariffs on locally manufactured components than on fully imported devices, making domestic production less competitive.
Additionally, the absence of a strong preferential procurement policy worsens the situation. Public hospitals often continue to source foreign-made high-end devices, perceiving them as more reliable and of higher quality. This limits the growth and scaling of local startups.
Historically, India’s industrial policy favoured pharmaceuticals over medical devices. While India gained global prominence in generic drug manufacturing and exports, the medical device sector was often treated as secondary, receiving less strategic focus and investment. This led to a weak foundation in high-end medical devices manufacturing capabilities, with limited Research and development institutions dedicated specifically to MedTech innovation.
The formal regulation of medical devices in India came late. The Medical Device Rules, 2017, effective from 1st January 2018, established a regulatory framework for the manufacture, import, sale, and distribution of these devices. Before this, devices were largely unregulated, raising concerns about safety and quality. Further, only in May 2023, the Government of India introduced the National Medical Device Policy, aiming to achieve universal access to quality medical devices, boost domestic manufacturing capacity, and enhance global competitiveness.
However, regulation alone cannot drive industrial competitiveness. The domestic manufacturing landscape is fragmented, with most firms operating on a small or medium scale and lacking the necessary infrastructure and capital to compete globally. Unlike China, India does not offer super deductions for Research and Development, and its Production Linked Incentive (PLI) scheme provides modest financial support with limited uptake. Medical Device Parks have been launched but remain at an early stage, lacking the integrated ecosystems seen in China.
Conclusion
India’s medical device sector is poised for transformation, but moving from import dependence to innovation leadership requires systemic reform. The 2017 and 2020 regulatory frameworks laid the foundation, yet gaps in technology, scale, and trust persist. Beyond regulation, India needs robust fiscal incentives for R&D, investment in Medical Device Parks with testing labs and raw material supply chains. Stronger academia-industry linkages have become a necessity to commercialize indigenous technologies.
Preferential procurement policies in public hospitals can create assured demand for domestic products, while export competitiveness demands logistics support and global market-entry facilitation. Skilling programs and innovation hubs in biomedical engineering and regulatory science are vital for building a future-ready workforce.
With coordinated policy, strategic investment, and industry collaboration, India can reduce its reliance on imports and emerge as a global hub for affordable, high-quality medical devices, strengthening national health security, boosting economic competitiveness and advancing the path to Aatmanirbhar Bharat.
Devapriya P Nair is a TRIP intern
Mentored and edited by Sneha Yadav
References
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