A trade group is calling on India’s Department of Pharmaceuticals to promote incentives for the country’s components industry, saying doing so will help to fuel domestic manufacturing of medical devices.

Boosting micro, small and medium enterprises in the components sector would encourage Prime Minister Narendra Modi’s “Make in India” program, the Confederation of Indian Industry says in an Aug. 4 document. The program aims to transform India into a global manufacturing hub for a range of industries.

“CII has emphasized the importance of recognizing the fact that the manufacturing business case in India is quite challenging,” the trade group says.

“While the labor costs are lower in the country, the capital investment and productivity of the labor are critical limiting factors to the manufacturing business case. Combined with approval delays, this makes the manufacturing environment quite challenging for entrepreneurs,” it adds.

To help overcome these challenges, the group recommends creating medical technology manufacturing hubs throughout the country.

The government could offer subsidized land prices to set up these hubs, as well as develop joint ventures, licensing agreements and public-private partnerships to enhance the manufacturing ecosystem.

CII singles out Singapore and Ireland as examples of countries where hubs have helped to foster innovation. Singapore’s medical technology industry nearly tripled its manufacturing output from about US $1.1 billion in 2000 to about $3.1 billion in 2011.

Meanwhile, Ireland has seen tremendous success in its devices sector, which enjoys annual sales of more than $6.6 billion.

The recommendation echoes a call earlier this year by the public-private Task Force on the Medical Devices Sector in India for device hubs with common medical device testing facilities that would be funded at least partially by industry (IDDM, April 17).

The group also proposes low-cost capital through favorable loans and tax incentives to spur investment and lure manufacturers to India. These manufacturers would improve the components ecosystem, giving local companies access to their products.

CII also argues that the regulatory bar is set too high for devicemakers, with a Byzantine process requiring approvals from a range of agencies. Simplifying the process would help bolster the industry.

The group says that incentivizing components makers should be a higher priority than implementing the preferential market access policy for medical devices, which gives preferential treatment to domestic goods to encourage Indian manufacturing.

Currently, a PMA policy is in place for procurement of electronics and information and communication technologies by government and state-owned enterprises. — Elizabeth Hollis