Mitra Industries Pvt Ltd, a manufacturer of medical devices, is among the only four companies in the world that make ERCP endoscope and the only company in India to manufacture medical flexible video endoscopes with opto-mechanical technology. “We have incorporated LED innovations in our endoscopes (being first in the world) with cutting-edge Japanese technology. When we first launched our products, a major foreign brand dropped their prices and quickly copied our product, as they feared competition from us,” says its managing director, Nitin Mahajan.
Nitin, who is also the joint co-ordinator (electronics vertical group) of Association of Indian Medical Device Industry (AIMED), is fighting against all odds to get medical devices covered under the Preferential Market Access policy. In a tete-a-tete with Srabani Sen of Electronics Bazaar, Nitin points out that policies are secondary support; the government first needs to create a motivational environment for Indian manufacturers.
Wednesday, July 31, 2013: EB: What is your opinion about the current electronics manufacturing scenario in India?
As per the trade pundits, India is going to be the next manufacturing destination. But this is unlikely to happen in the near future. The manufacturers in India face a lot of challenges. The environment for manufacturing in India needs to be very motivational. India needs to learn from other countries how to protect its own manufacturers, how to give them a level playing field, and how to encourage them to invest in the industry. India is far behind on all these fronts. I don’t feel that we are ready to be called the next manufacturing destination yet, unless the government steers the industry in the right direction.
India lacks R&D facilities in medical electronics that are essential for world class quality products. Government, must support manufacturing. Definitely, there is no dearth of highly-skilled technical manpower in India, they only need motivation to partner with the industry to come up with competitive world class products.
EB: What do you think about the Preferential Market Access (PMA) policy?
The PMA policy, no doubt, is wishful thinking by the government. The government does talk of localisation, indigenous manufacturing, improvement in GDP, and increasing employment in the manufacturing sector. But when it comes to purchase or procurement of electronic products by government departments and organisations, they go for imported products. Besides, they look down upon the Indian manufacturers. So, only if the government truly abides by the PMA policy, and Indian manufacturers and their products are promoted with sincerity, will this policy be a great help to the manufacturers.
EB: Do you think that the PMA policy will boost manufacturing in India?
What can take India forward is manufacturing, as India is a big market for electronic products. India-made products need to be competitive and of low cost so that the benefits go to the masses. This can happen if mass manufacturing takes place and the volume of production increases.
The PMA policy is not a direct support from the government to boost manufacturing in India; rather, it is an indirect support. The manufacturers need a direct support from the government, that is, improvement in the power and water shortage situations and in the infrastructure.
We also want government support to develop an electronics manufacturing ecosystem. India does not have a fab unit and none of the major components are being manufactured in India. Unless the government, or private players take manufacturing forward, it will never happen. Besides, there is a lot of red tapism and there are labour issues. We need the government to resolve these serious issues, even before the PMA policy gathers momentum.
EB: But the government claims that the PMA policy was formulated along with industry associations, and that such a demand came from within the industry.
The government is definitely trying its best, but it is dependent on some information provided by trade bodies and industry associations that are heavily funded by MNCs. In fact, these associations are encouraging a scenario in which imports get cheaper. Hence, they are not pro-manufacturing. On the other hand, a small association like the Association of Indian Medical Device Industry (AIMED) is trying to push and encourage Indian manufacturing for both domestic and global manufacturers.
EB: What are the other obstacles being faced by the electronics manufacturers?
They are the same old issues—power shortages, clearance problems at ports, procedural delays which mean higher costs, a tough environment for work, labour issues, etc. The inverted duty structure is not helping us. If you import finished goods (especially in case of medical devices) you need to pay 5 per cent duty and another 5 per cent as countervailing duties (CVD); so you end up paying 10 per cent duty without VAT and excise. But if you are a manufacturer and are importing components, then you need to pay a minimum of 10 per cent, going up to a maximum of 25 per cent as duty (let’s take the average as 20 per cent duty) along with VAT and excise, which add upto more than 30 per cent higher costs. Hence, instead of 10 per cent, I am competing in an environment in which my duty payments are two to three times higher, and this is not viable.
EB: So what are your suggestions to the government with respect to PMA and other policies?
We suggest that the government should bring all high-quality products like medical devices under the PMA policy, and not just a few chosen ones. Also, all these policies are just on paper and no action has been taken so far. Our other suggestions are:
- The inverted duty structure needs to be corrected.
- There is a flood of second-hand imports into the country. These second-hand imports either need to be banned or be put under a duty slab of 300-400 per cent to protect sub-standard products being imported for use on un-informed patients.
- There should be low import duty such as 5 per cent on all components used for manufacturing, so as to facilitate manufacture of such components within the country.
- All foreign companies are welcome to manufacture in India, but in every aspect, the first preference should be given to indigenous manufacturers.
If we want Indian manufacturing to be revived, these issues have to be addressed and resolved; only then will the GDP go up. If manufacturing takes off in large volumes, the related services will also flourish. If I sell something, it will need service and support; so there are opportunities for yet more business to happen.
EB: What are the products you have requested the government to cover under PMA?
Under the PMA policy, we want anything under medical electronics, like electronic thermometers, digital thermometers, insulin, flexible medical endoscopes, implantable metal stents, etc, to be covered.
EB: As per the PMA policy, all finished products and components manufactured in India will have to be tested. Do you think this will have a positive impact on T&M business?
Definitely, yes. The good part of the PMA policy is that it is applicable to the products with standards. It will ensure that only standard-based products go into the market, after certain levels of testing like quality checking, safety checking, electrical safety checking, mechanical checking, etc. Only after these tests the product will qualify as a standard-based product. This will increase the level of testing and, hence, there will be more demand for T&M devices in the future.
EB: What is your take on the electronics manufacturing clusters (EMC) and the policy related to it?
EMC is a wonderful concept, which is supposed to encourage the development of the electronics manufacturing ecosystem in India. Everything related to electronics manufacturing is supposed to be available inside the cluster. Presently, everything is scattered in India—nobody knows where a testing or a prototyping facility is, or where components can be procured at the right price. An EMC is supposed to make life easy for the manufacturers to produce goods faster.
As far as the policy is concerned, everything is still on paper, and we just have to wait and watch. However, if one model cluster succeeds, others will soon come up.
Mere policy changes, incentives, schemes and announcements cannot bring about the desired change. There has to be an urgency to address all these issues holistically and make the environment attractive for the industry to invest in manufacturing.
For mass manufacturing to happen, the environment and trade policies have to be conducive. We have to address problems right from the macro to the micro level.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine