Union Budget 2022 – Reviving the Medical Devices Sector


Dr Rajiv Chhibber

As a believer of “India’s Growth Story” I have all the reasons to keep high expectations from the Union Budget 2022-23. The industry expects the finance minister to come with the provisions for economic revival even as the third wave of COVID-19 and Omicron have gripped the country. Precisely, the Union Budget 2022-23 should essentially focus on demand generation, job creation, healthcare, handholding MSMEs and enabling the economy to regain the lost thrust of a double-digit growth.

As far as the Pharmaceuticals and Medical Devices sector goes, a number of steps taken by the government in the last two years have clearly demonstrated the importance that the sector has gained. Schemes such as Production Linked Incentive scheme for APIs/KSMs and medical devices, schemes for pharmaceuticals and promotion of bulk drug and MedTech Parks were introduced which were in line with Atmanirbhar Bharat that encouraged domestic and international players to invest. Another welcome initiative taken by the Department of Pharmaceuticals was issuance of draft research and development policy that aims to create an ecosystem for innovation which focusses on areas to create a regulatory environment facilitating innovation and research in product development; incentivise private and public investment in innovation through a mix of fiscal and non-fiscal measures, and build an enabling ecosystem designed to support innovation and cross sectoral research as a strong institutional foundation for sustainable growth in the sector.

Besides above, the announcement of Ayushman Bharat Digital Mission (ABDM) was certainly a promising initiative in today’s digital era where the government plans to allot every citizen a health ID along with the platform to store the medical documents online. This coupled with growing telemedicine norm will surely help in making medical consulting available in remote areas and give a significant push to the IT-enabled MedTech start-ups.

With the above as a successful background, the Government has enough to seize this opportunity in the upcoming budget to develop clear priority-setting processes that are evidence-based considering vulnerable population groups by making use of state-of-the-art medical devices through regular evaluations and steadily revive the domestic industry so that India ensures self-sufficiency, accessibility, availability and affordability in healthcare.

The pharma and medical devices sector have gained significant momentum owing to the government’s Aatmairbhar Bharat initiative. The budget 2022-23 is expected to build on the Production Linked Incentive (PLI) schemes and encourage continued investments in capacity expansion of sensitive APIs, complex excipients, drug intermediates, biopharmaceuticals and medical devices.

However high customs duties, burden of additional health cess, lack of incentives for R&D in the medical device sector and creation of budgetary provisions for skilling and up-skilling at all levels and expand the width of healthcare insurance is what is required now. This should be in addition to allowance of tax computation on CSR expenditure and tax holiday to medical device research and development centres.

Another area of focus that the Union Budget 2022-23 needs to delve upon, especially since the government is looking at improving healthcare affordability and spreading its benefit to as many as domestic players possible, is to develop a larger domestic market which has enough critical volumes that domestic players can tap onto, enhancing their share, ultimately reducing import dependency which is now a whopping 80%.

Another critical ask in the Union Budget 2022-23 that will give a huge impetus to the medical devices segment, is the creation of a National and Centralized Reimbursement Agency needs to be attached to the Aayushman Bharat scheme. The idea is to have a commonly recognized agency that that will simplify reimbursement processes, accepts upgradation of technology, R&D and has provisions to include newer devices and versions in the reimbursement segment as is being done in countries like France, Japan USA etc., where the populations get the best device, getting better healthcare possibilities.

Lastly as a tangible low hanging item, zero custom duty for crucial raw material which are critical for manufacturing high-end devices and implants is expected in the Union Budget 2022 as India grapples with non-communicable diseases, taking a toll on its population.

In the end I can say that the Union Budget 2022-23 will be another defining moment for India as we emerge from the pandemic and bolster our stake to sustainable growth. With the Hon’ble Prime Minister reassuring that India will be a global hub for healthcare and global supply-chains at the World Economic Forum, Davos, a balancing act which recognises the growth impetus and inclusiveness would do immensely well for the Indian pharmaceutical and Medtech sector in short, medium and the long run. While the fundamentals are still strong and supportive, the right fiscal announcements and policy measures will decide how India comes out from a crisis in the post-pandemic world.

Dr Rajiv Chhibber is a Public Health Communications and Industry Policy Expert. Views expressed are personal.


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