‘Make in India’ slogan a mere charade for Indian Medical Device Manufacturers

Association of Medical Device Industry is deeply disappointed over Draft Preferential Market Access (PMA) issued by DOP

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New Delhi:  ‘Make in India’ slogan has proved a song without lyrics for Indian Medical device manufacturers. The Draft Medical Devices Preferential Market Access Policy issued by Department of Pharmaceuticals ( DoP) has dashed their long cherished hopes of getting a strong foothold in Indian Medical Device market. It has left Indian Medical Device Manufacturers highly disappointed.

Mr Rajiv Nath, Forum Coordinator, (AIMED) Association of Indian Medical Device Industry has expressed deep disappointment over the Draft Medical Devices Preferential Market Access (PMA) Policy issued by DoP.

‘We are disappointed with the Draft of PMA policy issued by DoP. We will study it collectively and respond shortly but it is a clear case of a lost opportunity to promote indigenous manufacturing of medical devices to boost ‘Make in India’ initiative,’ Mr. Nath said. in a press release to Medicare News.

The Draft PMA policy in its present form does not provide Preferential Pricing to Indian manufacturers, no incentives on maintaining and improving Quality, indigenous development and no redressal / penal provisions against use of exclusionary 3rd country Regulatory approval mandatory clauses e.g. US FDA.

It doesn’t provide for any Corpus for ensuring no late payments by Government. Such a Corpus would be necessary to ward of any adverse impact on financials of a company in case of delayed payments by the Government.

We are yet to study the Draft PMA in detail and take a stand but regret to note that following suggestions made by us to give encouragement &boost  Manufacturers producing in India over imports have not been considered e.g.,

  • Preferential Pricing for Domestic Manufacturers based on World Bank norms.
  • Preference for ICMED / ISO Certified Manufacturers to boost quality.
  • Preference for Design India Certified Manufacturers to boost indigenous development.
  • Timely payment against Govt. Supplies.
  • Penal provision against Hospitals that keep exclusionary compliance Clause of USFDA Certification as 3rd Country Regulatory approval.

“The Prime Minister wants to boosts Make in India with Buy in India and DIPP provided a Preferential Purchase order with a 20% margin of preference for domestic manufacturers however this margin of preference is not preferential pricing of 20% as is case in some countries like China which we are informed gives 15-25% price preference and others like Malaysia, Jordan, Uganda , Indonesia etc give 15% but DIPP Order only allows Indian bidders to match the L1 Lowest price bid of a foreign manufacturer (Read Chinese) if his bid was within 20% Range . The whole intention of Prime Minister and of amending GFR 153 got diluted; we wonder if he’s aware of this?

Consider also USA which will use a Non Tariff Barrier, that only countries recognised in their Trade Agreement Act are allowed to sell to US Govt Institutions and countries like India , China and South Africa etc are even unable to bid whereas the DoP PMA guidelines has no Penal Action or disciplinary actions like not allowing access to Finance to procure medical devices where tenders use exclusionary mandatory Clauses of compliance e.g. Regulatory Approval by US FDA (and CE ) to keep out Indian manufacturers from bidding in their own country tenders .The option to match L1 Lowest price of a Chinese product is not a preference to an Indian Manufacturer – its only an option and this will hardly incentivise Indian manufacturing. Compare this to other Countries like Indonesia, China, Malaysia, Jordan, Uganda etc. that give 15% or higher price preference to manufacturers who produce in their country. This has motivated importers to shift manufacturing base to these countries to retain market share and given competitive advantage to domestic producers to add capacity. Sadly, an opportunity to boost Make in India Medical Devices is being Lost, ” added Mr. Nath.

We can match prices of any country other than China as it has no global market economies but a subsidized state sponsored eco system. How can we compete with low priced imports from china with non- remunerative, non- sustainable pricing unless Indian Govt. has supportive Policies, Mr Nath asked insisting India needs to follow the UN system of procurement based on sustainable costs and not based on L1 Lowest pricing that motivates some manufacturers to cut corners in regard to quality and service delivery of product and give poor image to Brand India.

By denying preferential pricing to Indian manufacturers, the Draft policy guidelines can be said to be bordering on encouraging ‘Pseudo manufacturing’, He felt. It is sad that genuine concerns and suggestions of Domestic Medical Device Manufacturers are being repeatedly sidelined.

Background Note : India is import dependent on Medical Devices at over 70 -90% for its needs and has an import bill of over 27,500 Cr Rs. Indian manufacturers via their Association AiMeD have been highlighting the need for India to address this import dependency as they are many time unable to win public healthcare tenders and loose out to lower priced imports especially from China due to low tariff protection with import duty in most cases a maximum of 7.5% or they looseout to American competition for Tenders where Bid specifies USFDA approval as a mandatory qualification required.

The MOH&FW in its recently stated Health Policy states in clause 13.11 “ towards furthering Make in India , the private domestic manufacturing firms /industry could be engaged to provide customized indigenous medical devices in the health sector and in creation of forward and backward linkages for medical devices production. The policy also seeks assured purchase by Government health facilities from domestic manufacturers, subject to quality standards being met.” Similarly clause 13.13 talks about incentivizing Private Sector in proposed strategic purchase by Government .Clause 18 advocates the need to incentivize local manufacturing considering the over 70% import dependency.

Many Countries have a Policy to encourage Domestic Manufacturing. Even USA has a Buy American Policy to 1stconsider allocating supply to US Companies to US Public Healthcare and Overseas USAID procurement. Indian Exporters to the US are challenged with inability to sell to US Defense Forces while appointing Distributors. (In fact their new President has threatened some major Automotive Manufacturers to either manufacture in USA or pay hefty fees, just to encourage Domestic Production). Similarly, to support the ‘Make in India’ Policy the Public Procurement Order 2017 has been issued by DIPP on 15 June 2017 whereby Purchase Preference shall be given to Local Suppliers in all Procurement undertaken by Govt. procuring entities for domestically manufactured good with minimal local content of 50% and the Nodal Ministry may prescribe a higher or local percentage and the manner of calculating it

The Dept. of Pharmaceuticals on Friday, 16th March 2018 posted Guidelines for implementation of Public Procurement Order in respect of Medical Device Sector where for Tenders below Rs. 50 Lacs have been addressed but is silent for Tenders above Rs. 50 Lacs which are open for International Bids. Under the New Guidelines the 50% Domestic Content has been diluted to read :

Category of Medical Devices % of Local Content

 

Medical disposables and consumables 50%

 

Medical electronics, hospital equipment, surgical instruments 25%

 

Implants 40%

 

Diagnostic Reagents/IVDs 25%

 

 

The critical amendment by Dept of Expenditure last year of its GFR 2017 clause 153 paves the way for Reserved Items and other Purchase/Price Preference Policy sub clause (iii) states that the Central Government may, by notification, provide for mandatory procurement of any goods or services from any category of bidders, or provide for preference to bidders on the grounds of promotion of locally manufactured goods.”

 

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