The need to increase the capacity of the healthcare sector will continue to increase as the population increases

- Government should accelerate broad policy reforms rather than focusing on a particular sector

Recent data shows that government spending on the healthcare sector has increased over time and that private spending on health has declined. Meanwhile, the Union Cabinet recently approved a policy for the medical devices sector. As India has now become the most populous country in the world, it is believed that its population will continue to grow in the coming decades before stabilizing. In such a situation, the need for capacity building of the healthcare sector, which is currently limited to a large extent, will continue to increase. In this context, the creation of a vibrant local facility for manufacturing medical devices will prove to be very useful. Currently, India is highly dependent on imports in this sector. According to one estimate, imports of medical equipment will increase by over 40 per cent in 2021-22 to Rs. 63,200 crore has reached. The data also shows that electronics and appliances account for more than 60 percent of medical equipment imports.

In such a situation, the government wants to increase production and reduce dependence on imports. According to government estimates, the size of this market is currently around $11 billion or about Rs. 90,000 crores. The policy has estimated that by 2030 it will be 50 billion dollars.

To increase activities in this sector, the government has started implementing a product-linked incentive scheme. So far 26 projects have been sanctioned under this scheme and it is estimated that it will cost around Rs. 1,206 crore will bring investment. So far an investment of Rs.714 crore has come. The government is also helping to set up four medical device parks in Himachal Pradesh, Tamil Nadu, Madhya Pradesh and Uttar Pradesh. It has also introduced a policy to create an enabling environment. The government wants to increase regulatory consistency. A system like single window clearance can be created for this. The government will also work to build enabling infrastructure and support research and development. The policy will adopt, among other methods, a multidisciplinary course dedicated to human resource development.

There is no mistaking the government's intentions given the massive work India needs to do to increase production and create employment in this sector. However, it is worth noting that setting goals and merely announcing policies often does not prove very fruitful. The government has been trying to boost manufacturing for decades but with little success.

Moreover, it is also important to accelerate broad policy reforms rather than focusing on any particular sector. For example, all businesses need single window clearance, infrastructure and logistics support and skilled manpower. In the absence of a comprehensively improved environment, focusing only on specific areas will not achieve the desired results. A recent report published in this newspaper shows that electronics production may fall far short of the target as exports will be only 53 to 55 percent of the target by 2025-26. It is also important that the government does not focus on raising rates to boost activity in the medical devices sector. The government has done this in many other areas.

It may be noted that India recently faced adverse decisions at the World Trade Organization as it imposed high duties on imports of information and communication technology products. As the WTO's Appellate Body is inactive it may not have any immediate impact but trading partners may retaliate by raising tariffs which will affect Indian businesses. Given the dominance of the global value chain in manufacturing, higher duty rates may not be the solution to encourage this activity. Policy makers should therefore focus on creating an enabling environment that will support production.