MedTech Sector Projected to Reach $20 Bn by FY27 with Govt’s New Manufacturing Scheme

The scheme is expected to surpass the performance-linked incentive (PLI) initiative introduced in FY21.

The recently launched MedTech scheme, aimed at enhancing local production in the medical technology sector, could expand the market to $20 billion by FY27 from its current size of $14 billion, according to industry experts.

With an allocated budget of INR 500 Cr over three years, the scheme seeks to incentivize domestic manufacturing of final products and raw materials, helping local companies compete against imported goods and expand into global markets.

The scheme is expected to surpass the performance-linked incentive (PLI) initiative introduced in FY21.

“There’s now a clear direction from the government. It’s no longer a lip service. The PLI scheme has mostly benefitted large multinational companies. There was nothing for medium, small, and micro enterprises. The PLI scheme for medical devices has a budget of ₹3,500 crore, but the actual disbursement has been low compared to the funds available. This latest scheme will enable local manufacturers to compete with the imports market,” said Rajiv Nath, forum coordinator at the Association of Indian Medical Device Industry (AiMeD).

Additionally, experts noted that a large number of domestic MedTech manufacturers depend on imported components for raw materials, an issue the new scheme aims to address by encouraging backward integration.

The scheme is structured across five key areas: strengthening infrastructure, reducing import dependence, building capacity and skills, supporting clinical studies, and promoting the industry internationally.

“The industry promotion stimulus will pave the way for vitally important market research and marketing of the industry to the world,” noted Pavan Choudary, chairman of the Medical Technology Association of India (MTaI).

Current Scenario

Currently, India relies on imports for 70% of its medical device needs, a reliance that has declined from 90% with the initial impact of the PLI scheme but remains significant.

Experts project that this new initiative will further reduce the cost of medical devices, with prices expected to drop by 5-7% as domestic production margins tend to be lower than those for imported products.

Local manufacturers are also anticipated to benefit from the ability to enter long-term contracts with buyers, an advantage often limited by supply chain challenges and currency fluctuations.

“Currently, local manufacturers and traders cannot get into long-term contracts (like 2 years) with buyers like hospitals and government agencies. Most of the contracts are for 3-6 months or for a specific quantity. This is because they cannot make long-term commitments due to possible supply chain issues. Also, the currency fluctuations affect their ability to go for long-term deals. Once these manufacturers can start making devices locally, they will have price stability, and their volume of business would go up. They can also potentially enter new markets,” added Nath of AiMeD.

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