India’s $18 billion medical device market faces structural hurdles that limit domestic growth. Manufacturers struggle with high costs and complex government approvals, making the sector heavily import-dependent. Experts suggest a dedicated Medical Devices Act and better pricing rules to help local firms compete fairly against cheaper global imports by 2030.
The industry isn't competitive enough, thanks to a fragmented market, uneven procurement policies, and skewed pricing rules
India's medical device sector is an emerging industrial sector with significant economic, technological and health related implications. The medical device market is worth about $18 billion and could exceed $30 billion by 2030. Yet the sector remains heavily import-dependent, especially in high-end devices. Despite its significant growth potential, the sector continues to face structural constraints in building domestic manufacturing capacity, technological capabilities, and industrial competence. These constraints have made the sector import-dependent and have limited its ability to develop domestic manufacturing capabilities and effectively compete in the world market. In this context, five structural constraints of the domestic medical device manufacturing sector deserve attention.
First, the Indian medical devices market is highly fragmented and comprises a large number of MSMEs that operate at low capacity and scale. Indian manufacturers face a 10-15 per cent cost disadvantage against hubs such as China and parts of Southeast Asia. The causes are high capital and energy costs, logistics bottlenecks, scarce risk capital and thin investment in testing and R&D. Opening a greenfield plant can take years because more than 50 interdependent state and Central government approvals must often be secured sequentially, causing costly delays. A long-awaited dedicated Medical Devices Act, overseen by a single specialised regulator as recommended by Parliament's Health Committee, should replace the drug-law framework, which was never designed for devices.
Quality control orders
Second, Indian firms are inspected and audited against Schedules 4 and 5 of the Medical Devices Rules, while overseas manufacturers are generally asked for ISO 13485 certification and not inspected by CDSCO. Quality-control orders on raw materials and components raise input costs, though finished devices are already covered by technical regulations. Parity would come from accepting third-party audits for high-risk medical devices and recognising ISO 13485 and QCI's Indian Certification for Medical Devices (ICMED) certification for domestic units.
Third, the pricing rules in the medical device sector create an asymmetric level playing field between domestic manufacturers and foreign suppliers. Suppose a device sells at ₹100 at the first point of sale. With a 30 per cent trade margin, a domestic MRP is about ₹143. If the importer's own margin sits outside the cap, the same product reaches about ₹204. To ensure level playing field, caps on trade margins should start from the first point of sale, with importers treated as distributors of overseas makers. Rationalised margins, tested through national pilots, protect patients without starving supply chains, as some earlier state caps did.
Fourth, uneven procurement policies have severely impacted the development of India's medical device manufacturing. Public procurement market is fragmented across ministries, States and hospitals, each with its own tender conditions. Some tenders demand USFDA or CE approval, shutting Indian makers out of their own market; a valid CDSCO licence, with preference for ICMED certification, is a fairer test. Global tender exemptions cover about 350 devices, which dilutes local preference. Imports of pre-owned equipment often arrive without verification or audit. A highly fragmented market structure promotes demand-side uncertainties for domestic medical device manufacturers and discourages them from committing to large-scale investments in specialised production capacity. This not only undermines domestic manufacturing but also perpetuates dependence on imported medical devices, components, and technologies.
Asymmetric liberalisation
Fifth, India's trade agreements have undoubtedly contributed to better market access for domestic medical device manufacturers but with limited gains in scaling up domestic medical device manufacturing capabilities. One of the key reasons for the limited gains from India's trade agreements is asymmetric trade liberalisation.
Most of our FTA partners have mature medical device industries with economies of scale and technological sophistication. Tariff reduction commitments under trade agreements have facilitated the import of finished medical devices, while domestic producers continue to struggle with high costs, technological, scale, financing, and ecosystem constraints. These challenges are further compounded by liberal rules of origin-related provisions that allow foreign firms to gain preferential market access in assembled products with limited value addition requirements.
Finally, India has the potential to become a global hub for medical-device manufacturing. To realise this vision, policy support must move beyond import substitution towards building globally competitive manufacturing ecosystems through stable regulations, cost competitiveness, deeper localisation, greater synergy with global regulatory frameworks, stronger R&D support, robust testing infrastructure, and a calibrated trade policy that balances export opportunities with domestic industry development. This will strengthen both healthcare security and India's position in global medical device value chains.
Nath is Forum Coordinator, AiMeD, and Singh is Associate Professor at OP Jindal Global University, Sonipat. Views are personal