“Medical Devices Exclusion from India-EU FTA Essential in National Interest”
India needs a “tit-for-tat” policy to ensure that its manufacturers can compete on a level playing field, writes Rajiv Nath, Forum Coordinator, Association of Indian Medical Devices Industry (AiMeD).
As India and the European Union (EU) engage in negotiations for a Free Trade Agreement (FTA), there is growing concern over the potential inclusion of medical devices in the final deal of permitting duty-free access to European Medical Devices to the large and rapidly growing Indian Healthcare Market. This issue calls for immediate and thoughtful consideration. At the heart of this debate is the question of India’s healthcare security (which was recently challenged in Covid times when international supply chains disrupted and country was forced to go into lockdown) and the future of its domestic medical devices industry, both of which are at risk if the import of medical devices is further liberalized under the FTA.
In the last four years, the import of medical devices into India has skyrocketed by 68%, and around 70% of medical devices used in the country are imported currently. This huge over-dependency has already raised serious concerns. And India’s experience with previous FTAs only amplifies these concerns. Take the Japan-India Comprehensive Economic Partnership Agreement (JICEPA) for example, where medical equipment imports from Japan rose by 19% between FY20 and FY24.
Germany and the Netherlands, both EU countries, are already among the top five exporters of Medical Devices to India.
While India allows the imports of these devices with minimal regulatory hurdles and no factory inspections, Indian manufacturers face stringent requirements to sell their products in the EU. The CE Certification process, mandatory for Indian medical devices entering Europe, is both extremely expensive and highly time-consuming. Moreover, EU regulators get Indian factories rigorously inspected, while Indian manufacturers face no such reciprocal benefits.
India needs a “tit-for-tat” policy to ensure that its manufacturers can compete on a level playing field. The Indian government must insist on similar inspections and compliance checks for EU-made medical devices, ensuring that they adhere to Indian Medical Device Rules (MDR) and provide evidence of domestic value addition.
The EU’s regulatory framework allows companies to label themselves as a ‘Legal Manufacturer’ without necessarily being involved in the actual manufacturing process. This has enabled pseudo-manufacturing to inadvertently thrive in the EU, creating a loophole where the true country of origin is not always clear to consumers as not required to be mentioned on the packaging. This lack of transparency is in stark contrast to the requirements in India and the United States, where medical devices must be clearly labelled with their country of origin based on domestic value addition requirements. There’s a huge risk of 3rd country exports to India via the potential zero duty access route as a purported EU origin product though that Medical Device may not be made in Europe. Without physical factory inspection and verification of value addition how will Indian customs distinguish what’s made in EU to what’s imported via EU?
The Indian government has the opportunity to protect its domestic manufacturers and ensure long-term medical security by excluding medical devices from the India-EU FTA. Other countries, such as China, Singapore, and Japan, have benefitted more than India from previous FTAs, leaving India at a competitive disadvantage. It is crucial that India learns from these experiences and take a stand that protects the domestic medical device industry and safeguards national health interests.
