The recent reduction in US import tariffs on Indian goods, from as high as 50% to 18%, is being hailed as a significant boost for India's medical devices sector. This move has the potential to unlock billions of dollars in export opportunities and strengthen India's position in global supply chains.
The US tariff cut addresses a long-standing vulnerability for Indian medical device exporters: thin margins. Rajiv Nath, chairman and managing director of Hindustan Syringes & Medical Devices (HMD) and forum coordinator of the Association of Indian Medical Device Industry (AiMeD), has described the tariff cut as a "game-changer" and a "decisive turning point". He believes that this move significantly improves India's position relative to Chinese suppliers, who continue to face higher Section 301 duties on medical devices.
India's medical devices industry is currently valued at around $11 billion. Despite efforts to increase domestic production, India relies heavily on imports to meet its demand, with approximately 70-75% of domestic needs being met through imports, primarily from the US, China, and Europe. However, exports have been steadily increasing, reaching close to $3.5 billion annually, driven by products such as consumables, diagnostics, implants, and low-to-mid-tech devices. Easier access to the US market is expected to significantly accelerate this growth.
The tariff cut aligns with India's broader efforts to strengthen domestic manufacturing through initiatives like the Production Linked Incentive (PLI) scheme for medical devices and the establishment of dedicated medical device parks. Experts believe that improved price competitiveness in the US could help Indian manufacturers move up the value chain, from low-margin consumables to more sophisticated equipment and devices.
From a strategic perspective, the tariff reduction reinforces India's position as a reliable alternative manufacturing base, especially given ongoing geopolitical tensions and supply chain disruptions. Rising demand in the US for cost-effective medical devices, driven by pressure to control healthcare costs and improve access, could also benefit Indian manufacturers. Indian manufacturers are known for producing quality devices at competitive prices, which could lead to increased acceptance among US buyers, hospitals, and group purchasing organizations, particularly in price-sensitive segments.
The US tariff reduction follows India's recent trade agreement with the European Union, where duties on medical devices were cut from 27% to zero. Some observers suggest that the EU deal may have strengthened India's negotiating position with the US.
In fiscal year 2023-24, India's medical device exports to the US were valued at $714.38 million, while imports from the US stood at $1.52 billion, highlighting the existing trade imbalance that the sector aims to address.
The reduced tariff is expected to lower export costs for Indian manufacturers significantly. It is anticipated that this will boost the competitiveness of Indian medical device exports, particularly in the context of the "China+1" strategy, where companies are looking to diversify their supply chains beyond China. The move is also expected to make it easier and cheaper for India to import advanced medical technologies from the US.