April 1, 1997

6 Min Read
India's Medical Device Market Is Becoming Too Big to Ignore

Medical Device & Diagnostic Industry Magazine | MDDI Article Index

An MD&DI April 1997 Feature


Significant economic reforms in the 1990s and a growing middle class have greatly increased the purchasing power of the Indian health-care system. In 1996 India's gross domestic product (GDP) grew 6.6%, while the earnings for Indian corporations averaged approximately 20%. These developments, a result of the economic reforms that began in July 1991, are just two reasons why trade between the United States and India has experienced substantial growth in this decade. With the world's second largest national population--930 million--India's health-care sector offers U.S. medical device manufacturers enormous opportunities. Growing between 15 and 20% a year in the 1990s, India's market for medical devices reached $680 million in 1995. Assuming the government of India continues to support improvements in the nation's health-care system (which presently accounts for 6% of the GDP), demand for U.S. medical devices should grow steadily well into the next century.

Most medical devices and supplies bought in India today are imported. U.S. exports to the country reached $57 million in 1996, a 19% increase from 1994, and constitute a 40% share of the device market. The Indian government has gradually reduced its once high tariffs and has delicensed imports. Tariffs on medical goods now range from 15 to 40%, depending on the product. However, public hospitals that provide free treatment to at least 40% of their registered patients are exempt from customs duties. Under current regulations, hospitals can also import used or refurbished medical equipment without a license, but the equipment must have a minimum residual life of 5 years. Furthermore, if medical equipment is imported by state-run hospitals and related public institutions involved in research and development, the products can enter the market duty-free.

Along with imports, local production of medical devices has increased as well. There are more than 90 indigenous medical manufacturers, of which 22 dominate production, and several joint ventures and foreign collaborations with U.S. companies. Foreign investment approvals have increased dramatically since 1991. Over $9.7 billion in direct foreign investment was approved in 1995, more than double the 1994 level and about four times that of 1993. The United States is the leading source of such investment in India, accounting for about 20% of total investment approved in 1995. (Direct foreign investment in India requires approval by the foreign investment promotion board, now part of the Ministry of Finance and the Reserve Bank of India.)

Historically, most Indians had very limited access to any type of modern medical service. Today, however, the situation is much improved, for several reasons. First, there is a growing awareness about health issues within India and an increasing demand for quality care at affordable prices. Second, the government has made large investments in health care, as part of a five-year-plan to provide better health-care facilities. And third, a growing middle class of 50 to 80 million Indians are demanding more sophisticated medical treatment, a demand largely answered by private institutions.

The Indian government provides comprehensive health insurance for government workers, who account for about 5% of India's population. Those in the private sector can purchase various health insurance plans from the General Insurance Corporation, one of two publicly held, monopolistic insurance companies. (Private insurance companies are banned by law.) Although successive administrations have proposed opening the insurance market to foreign investment, the process of doing so will undoubtedly be long and complex. The current United Front government has introduced legislation to establish an insurance regulatory authority to oversee the two insurance monopolies and act as a stage for liberalization of the market, but its chances of passing in the parliament are uncertain at best.

There are four types of Indian health-care facilities that use foreign medical equipment: primary health centers and rural hospitals, government hospitals, private hospitals, and teaching institutions. According to the Confederation for Indian Industries, one of the largest industry associations in the country, there are almost 9500 private hospitals and nursing homes in India, and the number is increasing rapidly. The majority of Indian hospitals are located in major cities such as New Delhi, Madras, Bombay, Calcutta, Hyderabad, and Bangalore. Private hospitals outnumber state facilities by two to one and purchase 40 to 50% of imported devices. Private hospitals tend to invest in sophisticated foreign medical devices because their doctors are mostly trained abroad, particularly in Europe and the United States. India's Apollo Hospital in New Delhi, for example, the world's fourth-largest hospital, is well stocked with high-technology medical equipment from abroad.

India has nearly 450,000 registered physicians, or about 1 per 2000 people, a disproportionately low figure for a country with such an immense population. Although there are twice as many private as public hospitals, nearly half of all physicians work in the public sector. Indian doctors play an important role in purchasing medical devices for hospitals and other health-care facilities, and their influence is growing. But their demands for quality and sophistication in medical products are counterbalanced by another key factor: price. Because most of the population cannot afford to pay for health care, institutions in turn pay careful attention to costs in making their purchasing decisions.

Indian health-care providers view the FDA-regulated products of U.S. medical device companies as the best in the world. U.S. manufacturers should seize this tremendous advantage and use it as an effective tool for selling their products in this lucrative and growing market.

Victoria Kader is a senior analyst and Duaine A. Priestley is an international trade specialist at OMMI.


To help U.S. companies take advantage of the growing medical device market in India, the U.S. Department of Commerce, Office of Microelectronics, Medical Equipment, and Instrumentation (OMMI) is organizing a trade mission to India in 1998. The mission will include stops in New Delhi, Bangalore, and Madras, three of the most densely populated cities in India. These markets have the highest concentration of health-care facilities in the country and offer the best prospects for sales. U.S. firms will be able to meet with potential Indian purchasers and make helpful government and business contacts. Companies interested in participating should contact Duaine Priestley at 202/482-2410; fax 202/482-0975.

Upcoming OMMI trade promotion programs related to medical devices are listed in the table below. Please call 202/482-2470 for further information.




APLC: Pragomedica


April 22-25, 1997


Kiev (Ukraine)

May 13-15, 1997

Trade fair: Exposalud


May 13­17, 1997

Trade fair: Hospitalar '97

São Paulo

June 17­20, 1997

Trade fair: Sinomed '97


June 25­28, 1997

Trade mission to eastern Germany and Eastern Europe

Berlin, Vienna, and Bratislava (Slovakia)

September 1997

Trade mission to former Soviet Union

Nizhni Novgorod and Kazan (Russia)

October 1997

APLC: Hospitalaria '97

Buenos Aires

November 1997

APLC: Arab Health


December 1997

Trade mission to India

New Delhi, Bangalore, and Madras

January 1998

Trade mission to China

Beijing, Shanghai, and Guangzhou

April 1998

Copyright © 1997 Medical Device & Diagnostic Industry

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