SYLLABUS

GS-3: Issues related to direct and indirect farm subsidies and minimum support prices; issues of buffer stocks and food security.

Context: The Government has extended the Production Linked Incentive (PLI) Scheme for Promoting Domestic Manufacturing of Medical Devices (PLI-MD) up to 2035–36, with approximately ₹2,700 crore available for fresh applications.

Understanding the PLI Scheme for Medical Devices (PLI-MD 1.0)

• Launch and Objective: Launched in 2020–21, the scheme had a financial outlay of ₹3,420 crore for the period 2020–21 to 2027–28. It aimed to promote domestic manufacturing, attract investment and reduce import dependence.

• Original Target Segments: The scheme covered four categories based on the nature and clinical application of medical devices:

• Cancer care and radiotherapy medical devices.
• Radiology, imaging (including ionising and non-ionising radiation products) and nuclear imaging devices.
• Anaesthetics, cardio-respiratory medical devices (including relevant catheters) and renal-care medical devices.
• All implants, including implantable electronic devices.

• Incentive Mechanism: Selected companies were eligible for incentives at 5% of incremental sales of eligible medical devices manufactured in India, for five years. The original scheme was applicable only to greenfield projects.

• Achievements under PLI-MD 1.0: Enabled domestic manufacturing of over 60 high-end medical devices and components, with production valued at more than ₹16,000 crore.

• Policy Framework: The National Medical Devices Policy, 2023 provides a holistic framework for sectoral growth through six focus areas, including regulation, infrastructure, R&D, investment, skill development and global branding. The PLI scheme complements it by incentivising domestic manufacturing and investment. 

Key Highlights of PLI-MD 2.0

• Extension and Outlay: The scheme has been extended up to 2035–36, with approximately ₹2,700 crore available for fresh applications.

• Revised Target Segments: The earlier clinical application-based classification has been replaced by four manufacturing-oriented segments:

• TS 1: Medical consumables, disposables and implants.
• TS 2: Critical components.
• TS 3: High-end medical devices where domestic manufacturing is presently at a nascent stage.
• TS 4: High-end medical devices that are presently only assembled in India.

• Differentiated Incentives: Tapering incentive rates averaging approximately 5% for TS 1, 9% for TS 2 and TS 3, and 6% for TS 4.

• Relaxed Eligibility: The minimum sales threshold for claiming incentives has been discontinued and the minimum investment requirement reduced. Applicants can submit multiple applications across one or more target segments.

• Implementation Flexibility: Applicants will be allowed three years to establish manufacturing facilities, while the application window will remain continuously open over an extended period.

• Focus on Deep Manufacturing: Priority will be given to critical component manufacturing, value-chain integration and advanced equipment such as 3T MRI, PET-CT, ultrasound probes and consoles, and high-throughput IVD analysers, which are currently not manufactured in India.

Significance of the Extended Scheme

• Reducing Import Dependence: Promotes domestic production of high-end medical equipment and critical components, reducing reliance on overseas suppliers.

• Strengthening Domestic Value Chains: Shifts the focus beyond final assembly towards indigenous component manufacturing and greater domestic value addition.

• Boosting Investment and MSMEs: Encourages fresh investment, creates opportunities for domestic component manufacturers and supports employment generation.

• Affordable Healthcare and Export Competitiveness: Greater domestic availability, improved product quality and economies of scale can help reduce costs and strengthen India's position in global medical-device markets.

India's Medical Device Sector

• Market Size: India's medical-device sector is valued at approximately USD 14 billion and is projected to reach $30-50 billion within this decade, and likely to reach $250 billion by 2047.

• Global Standing: India is the fourth-largest medical-device market in Asia and among the top 20 globally.

• Export Performance: Medical-device exports increased from USD 2.5 billion in FY 2020–21 to USD 4.1 billion in FY 2024–25, reaching 187 countries.

• Import Dependence: India continues to depend substantially on imports, with hospitals and diagnostic laboratories relying on overseas suppliers for an estimated 70–80% of their equipment requirements.