The Hindu : Tamil Nadu / Chennai News : Diagnostics industry seeks Special Economic Zones

Online edition of India's National Newspaper
Sunday, Sep 03, 2006

Tamil Nadu

Tamil Nadu - Chennai

Diagnostics industry seeks Special Economic Zones

M. Dinesh Varma

Chennai recommended as a location for two zones "At present, 90 per cent of the medical technology products are imported"

CHENNAI : The multibillion-dollar diagnostics business in India is looking to emerge out of its dependence on imports, with the industry urging the Centre to establish Special Economic Zones (SEZs) that would encourage indigenous manufacturing of products and devices.

The medical technology sector feels that the Union Government should extend through these special zones a package of tax benefits, subsidised power and land to support indigenous enterprise.

"At present, 90 per cent of the medical technology products are imported,' said G. S. K. Velu, Managing Director, Trivitron, and president of the Association of Medical Devices and Diagnostics Suppliers of India (AMDSI).

The AMDSI has, in a recent memorandum, appealed to Union Health Minister Anbumani Ramadoss for a policy overhaul on the medical technology front. The memorandum has pitched for establishment of SEZs that would accelerate self-reliance and open up avenues for export to the developing world.

The Minister is reported to have responded positively to the proposals. Chennai is understood to be among the potential sites for initially establishing, at least, two, if not a cluster of, SEZs, in the country. "We have recommended Chennai as a site and offered to undertake responsibility of promoting the zone to attract investments," Dr. Velu said.

Medical technology products and devices constitute 20 per cent of the health industry, which is valued as a 10-billion dollar market. It is estimated that India imports 1.68 billion dollars worth medical devices alone annually.

However, the situation remains loaded against manufacturers with a web of taxes and duties on raw materials making it easier to import than produce as multinational players have long realised, it is pointed out.

According to the Association, though medical technology is one of the three vital pillars, alongside healthcare services and pharmaceutical industry, it lacked the kind of focussed attention the other two sectors received in terms of beneficial customs tariff and tax cuts/exemptions.

The AMDSI suggests enforcement of stringent rules through the Ministry of Commerce to stop free trading by multinational companies without manufacturing intent. MNCs wishing to trade in India should be asked to invest in creating world class manufacturing facilities here to cater to the domestic and international market.

Such measures, it is believed, would bring in foreign direct investment into India and also facilitate growth of indigenous medical devices and diagnostic manufacturing initiatives.

According to Dr. Velu, similar policies in the pharmaceutical industry had helped the sector become self-sufficient and outward looking. The AMDSI has also urged the Centre to consider allocating special funds for indigenous research and development initiatives for designing and manufacturing medical devices and diagnostic products.

``Government policies have not focussed on the big picture as far as this sector is concerned'', said Kailash Nath, Managing Director of CPC Diagnostics, which plays a trading-manufacturing dual role.

High-end manufacturing is non-existent and the few companies that make devices concentrate on the low-end equipment. The association's treasurer Nath says Special Economic Zones will not just benefit the industry but the end-user in terms of bringing down costs of optimum-quality products.

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