Scheme For Strengthening Of Medical Device Industry (SMDI) 2024: Closing The Gaps The PLI Scheme Left Behind

Arya Gupta

Background

Following the National Medical Devices Policy (NMDP) 2023, evidence available by 2024 suggested that the Production Linked Incentive (PLI) Scheme for Medical Devices had successfully encouraged domestic production of complex medical devices, including MRI and CT scanners. However, aggregate trade data indicate that the industry’s overall import dependence remained substantial, despite the expansion in domestic manufacturing capacity supported by the PLI.

The PLI’s incentive scheme was based on incremental sales, which incentivized final-product manufacturing, but neglected to provide a specific incentive for the more lucrative supply chain such as MRI systems, pacemakers, continuous glucose monitors, advanced ultrasound and diagnostic analysers, and others. Despite the expansion in domestic manufacturing capacity supported by the PLI, medical-device imports remained substantial, rising from US$6.24 billion in FY2020-21 to US$8.19 billion in FY2023-24 and US$8.82 billion in FY2024-25. The industry also faced challenges in the form of a lack of skilled MedTech workforce and decentralized testing facilities.

To meet these specific challenges, the Department of Pharmaceuticals (DoP), Ministry of Chemicals and Fertilizers, has introduced a new Scheme for Strengthening of Medical Device Industry (SMDI) on 8 November 2024, which was officially launched in New Delhi on 8 November 2024 by Shri Jagat Prakash Nadda, Union Minister for Chemicals & Fertilizers and Health & Family Welfare, in the presence of Smt. Anupriya Patel, Union Minister of State for Chemicals & Fertilizers and Health & Family Welfare, and Shri Arunish Chawla, Secretary, Department of Pharmaceuticals.

While the PLI was geared towards the big manufacturing companies that produce finished devices, SMDI is a more targeted instrument that targets MSMEs and startups with an outlay of ₹500 crore over three years, from FY 2024-25 to FY 2026-27. Nadda has termed the scheme as a ‘game changer’ to strengthen the medical device value chain in India without duplicating the efforts of PLI.

Functioning

SMDI operates through five components. The Common Facilities for Medical Device Clusters (CFMDC) component funds shared infrastructure, R&D facilities, design and testing centres, and other common facilities for medical device clusters, including support for establishing or strengthening testing laboratories. The Marginal Investment Scheme for Reducing Import Dependence (MIS-RID) provides a one-time capital subsidy of up to ₹10 crore for manufacturing key components, raw materials and accessories that reduce reliance on imports. The Capacity Building and Skill Development component addresses gaps in education, training and research by supporting the development of skilled human resources and the R&D ecosystem in the medical device sector.

The Medical Device Clinical Studies Support Scheme (MDCSS) provides financial support for clinical investigations, pre-clinical animal studies and clinical performance evaluation of new IVDs. Finally, the Medical Device Promotion Scheme supports industry promotion through meetings, seminars, workshops, roadshows, expos, manufacturer evaluation studies, database creation and international study missions. researchers.

Applications are submitted through a dedicated online portal (smdi.lsssdc.in), with DoP responsible for appraisal, eligibility verification and disbursement against claims. Rather than a single, one-time application window, DoP has run the scheme through successive, component-specific calls inviting fresh MIS-RID and MDCSS applications in June 2026 (deadline 23 July 2026) and a separate ‘SMDI 2’ call for CFMDC cluster-infrastructure proposals around the same period alongside direct outreach efforts such as a July 2026 awareness workshop held with LSSSDC and C-CAMP Bengaluru for roughly 150 industry representatives.

Performance

After almost two years of implementation, SMDI has recorded significant project approvals, although actual fund releases remain limited. A Lok Sabha reply by Minister Nadda on 24 July 2026 revealed that 24 projects under MIS-RID had been approved with grant assistance of ₹101.50 crore, while 13 projects under CFMDC had been approved or accorded in-principle approval, with aggregate grant assistance of ₹88.67 crore. Together, these amount to ₹190.17 crore, or about 38% of the scheme’s ₹500 crore outlay. However, only ₹20.62 crore had actually been released as of July 2026, indicating a substantial gap between approved grants and actual disbursement.

Indicator	At Launch (Nov 2024)	Latest Available (July 2026)
Total scheme outlay	₹500 crore, FY 2024-25 to FY 2026-27	Unchanged; ~8 months of the 3-year window remain
MIS-RID (import-substitution manufacturing)	Up to ₹10 crore/project, newly launched	24 projects approved, ₹101.50 crore in grants
CFMDC (cluster infrastructure)	Newly launched	13 projects have been approved or accorded in-principle approval under CFMDC, with aggregate grant assistance of ₹88.67 crore.
MDCSS (clinical studies support)	Up to ₹5 crore/project, newly launched	No approvals separately reported in latest official figures
Total approved (MIS-RID + CFMDC)	Not applicable	₹190.17 crore (~38% of 3-year outlay)
Total funds released	Not applicable	₹20.62 crore (~11% of approved; ~4% of total outlay)
Application process	Single launch window (Nov 2024)	Repeated component-specific calls and awareness workshops through mid-2026

Source: Compiled from the Department of Pharmaceuticals’ SMDI Operational Guidelines (2024), Newsonair / All India Radio (2024), Press Information Bureau (2026), and Lok Sabha written reply by Union Minister J P Nadda (24 July 2026), Government of India. See Selected References for full citations.

The approved MIS-RID projects are all in the area of deep value chain manufacturing, which the scheme was designed to address categories include X-ray tubes, RT-PCR machines, recombinant antigens and monoclonal antibodies, and polymer tubing for dialysis and infusion therapy, all of which were once imported. While the government has revealed project approvals for the other two legs of the scheme, MDCSS support for clinical studies has not separately reported project approvals in the latest official disclosure, indicating that this aspect of the scheme has lagged the others.

Impact

The early record of SMDI seems to indicate that it is broadly addressing the gaps it was intended to target. The approved MIS-RID projects are in the area of import-substitution manufacturing that the incremental-sales model of the PLI could not adequately cover, while the scheme’s dedicated focus on testing infrastructure and skilled personnel addresses structural constraints that require a more targeted approach. As of July 2026, ₹190.17 crore had been approved under the MIS-RID and CFMDC components, but only ₹20.62 crore had actually been released. This indicates that while project approvals have progressed, the conversion of approvals into actual disbursements remains limited at this stage.

The greater concern is the pace of implementation. As only ₹20.62 crore had been released against ₹190.17 crore in approved grants, delays in converting approvals into actual disbursements could limit the extent to which approved projects translate into operational manufacturing and testing capacity. The repeated requirement for re-application through fresh funding calls and awareness sessions, two years after the launch, also suggests that uptake among target beneficiaries such as MSMEs and startups has been relatively slow compared with the pace of announcements and approvals observed in several recent government incentive schemes.

Emerging Issues

The approval to disbursement mismatch (₹190.17 crore approved but ₹20.62 crore released) increases the risk that the ₹500 crore total spend of SMDI for three years will not be optimally used within the time frame of the scheme, which ends at the end of FY 2026-27.
The Medical Device Clinical Studies Support Scheme (MDCSS) does not appear to have reported any approvals in the latest official disclosure, implying that the clinical-validation arm of the scheme which is essential to turning manufacturing capacity into clinical devices approved by regulators and market-ready may not be as strong as MIS-RID and CFMDC.
Initial uptake has not been enough with a dedicated awareness campaign, as evidenced by recurring application calls for specific components and the number of MSMEs and startups who had attended component-specific awareness sessions almost 24 months after the launch.
There was no public dashboard that was updated on a regular basis for SMDI and the performance information provided had to be done from an omnibus Lok Sabha reply, which meant that it was difficult to track SMDI independently and in real-time.
The end of the scheme within a three-year period, combined with the slow rollout of funds observed to date, highlights the importance of timely implementation. With limited time remaining in the scheme period, delays between approval and actual disbursement could constrain the utilisation of the ₹500 crore outlay and limit the extent to which approved projects translate into operational manufacturing and infrastructure capacity. This makes timely disbursement and continued monitoring particularly important in the remaining implementation period.

Way Forward

The Department of Pharmaceuticals should prioritise timely disbursement for approved MIS-RID and CFMDC projects so that approvals translate into operational manufacturing and testing capacity within the remaining scheme period. For MDCSS, where uptake appears limited, the Department could provide targeted pre-application guidance through clinical-regulatory workshops and dedicated facilitation support for manufacturers, particularly MSMEs and startups seeking to undertake clinical investigations and performance evaluation. This would help address the regulatory and procedural barriers that may discourage firms from applying for clinical-study support.

Greater outreach to MSMEs and startups should accompany future application calls. Instead of relying primarily on repeated calls and general awareness workshops, the Department could adopt targeted outreach through medical-device clusters, incubators, industry associations and academic institutions, alongside application clinics that help potential applicants assess eligibility and prepare proposals. Given the relatively slow uptake observed to date, such measures could broaden participation and improve the conversion of the scheme’s allocated funds into approved and implemented projects.

Finally, SMDI’s performance should be assessed using outcome indicators in addition to approvals and disbursements. A periodically updated public dashboard could report, by component, the number and value of applications, approvals and releases, along with indicators such as manufacturing capacity created, value of domestic components produced, import substitution achieved, testing and clinical facilities established, clinical studies supported, MSME/startup participation and jobs or skilled personnel trained. These indicators would allow policymakers to assess whether SMDI is strengthening the medical-device value chain rather than merely measuring the pace at which funds are sanctioned and released. The Department should use these indicators before the end of FY 2026-27 to determine whether particular components require an extension, redesign or additional implementation support.

References

Department of Pharmaceuticals. (2024, November 8). Operational Guidelines for the Scheme for Strengthening of Medical Device Industry. Ministry of Chemicals and Fertilizers, Government of India. https://pharma-dept.gov.in/sites/default/files/Final%20guidelines%20for%20SMDI-8.11.2024.pdf

Newsonair. (2024, November 8). New Scheme for Medical Device Industry will make India self-reliant: Union Minister J P Nadda. https://www.newsonair.gov.in/new-scheme-for-medical-device-industry-will-make-india-self-reliant-union-minister-j-p-nadda

Press Information Bureau. (2026, June 29). Government Invites Proposals under the Scheme for Strengthening of Medical Device Industry (SMDI). Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2278917&reg=3&lang=1

Press Information Bureau. (2026, July). Awareness Workshop on Strengthening of Medical Device Industry (SMDI) Scheme. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2286033&reg=20&lang=1

Lok Sabha, Government of India. (2026, July 24). Unstarred Question: Production Linked Incentive (PLI) Scheme, Medical Device Parks Scheme, and Scheme for Strengthening of Medical Device Industry (SMDI) [Written reply by Union Minister J P Nadda, Ministry of Chemicals and Fertilizers]. https://sansad.in/ls/questions

Press Information Bureau. (2025, December). Medical Devices Manufacturers [PLI, Medical Device Parks, PRIP scheme status]. Ministry of Chemicals and Fertilizers, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2239576&reg=1&lang=1

About the Contributor

Arya is a Research and Editorial Intern at IMPRI Impact and Policy Research Institute, New Delhi. A Master’s student pursuing Economics at Delhi School of Economics and Economics graduate from Shri Ram College of Commerce (SRCC), University of Delhi, and originally from Jharkhand, Arya’s research interests include Indian political economy, labour markets and development policy.