Make do­mes­tic firms stronger

Down to Earth - - SPECIAL REPORT -

Al­low­ing free flow of for­eign funds is a prac­tice fol­lowed in the US where big man­u­fac­tur­ers con­trol the sec­tor. Ex­perts say In­dia should, in­stead, fol­low the model found in Ja­pan, Europe, China and asean coun­tries that cre­ates an en­vi­ron­ment con­ducive for small and medium man­u­fac­tur­ers.

K M Gopaku­mar from non-profit Third World Net­work says for­eign in­vest­ment is not re­quired be­cause the coun­try is al­ready ca­pa­ble of man­u­fac­tur­ing most med­i­cal de­vices lo­cally. “But they (lo­cal man­u­fac­tur­ers) are un­able to reach the peo­ple be­cause of a nexus be­tween multi­na­tion­als and hos­pi­tals,” says he. This could have been ad­dressed if the new pol­icy had pref­er­en­tial clause to push do­mes­tic man­u­fac­tur­ers, a prac­tice popular in most de­vel­op­ing coun­tries. China, for ex­am­ple, gives a 15 per cent pref­er­en­tial pric­ing to lo­cal man­u­fac­tur­ers. In­done­sia, Malaysia, Jor­dan and Turkey pay 15 to 20 per cent higher price to do­mes­tic pro­duc­ers than mncs while award­ing public health ten­ders. Even the World Bank gives pref­er­ence to do­mes­tic man­u­fac­tur­ers in its public health ten­ders.

Man­u­fac­tur­ers also say the coun­try should in­crease im­port duty on med­i­cal de­vices by at least 10 per­cent. Nath says such moves will make man­u­fac­tur­ing more vi­able in In­dia and will at­tract do­mes­tic in­vestors in the sec­tor. This is bet­ter than im­port­ing be­cause “al­most all de­vices present in de­vel­op­ing coun­tries have been de­signed for use in in­dus­tri­alised coun­tries”, says a 2010 World Health Or­ga­ni­za­tion re­port.

The rea­son health­care de­vices are ex­pen­sive in the coun­try, says Gopaku­mar, is be­cause the sec­tor has no price con­trol and the ex­ist­ing poli­cies en­cour­age im­ports. “The im­port duty on fin­ished de­vices is lesser than im­port­ing in­di­vid­ual parts for a de­vice,” says he. This high­lights the gov­ern­ment’s will­ing­ness to ben­e­fit multi­na­tion­als.

Ex­perts say that the coun­try’s grow­ing de­mand for med­i­cal de­vices should be met by do­mes­tic play­ers and not by multi­na­tion­als. This, they say, will hap­pen only if the gov­ern­ment cre­ates a more con­ducive en­vi­ron­ment that will al­low do­mes­tic play­ers to grow.

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