Make domestic firms stronger
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.