National Medical Devices Policy 2023: Building India’s Medical Manufacturing Ecosystem

Policy Update
Arya Gupta

1. Background

India’s medical devices industry has been unregulated, fragmented and import dependent. Until 2017, the industry was not subject to any specific regulatory regime. The first steps towards oversight were taken with the Medical Devices Rules, 2017 enacted under the Drugs and Cosmetics Act, 1940 and the COVID-19 pandemic further underlined the strategic significance of the industry and the related manufacturing gaps.

During the crisis, domestic companies ramped up production of ventilators, RT-PCR kits, PPE kits and N-95 masks, which had not been produced before, thus tapping into latent capacities, but India continued to import 80-90% of medical devices from the top five source countries: China, the United States, Germany, Singapore and Japan. The domestic manufacturing base is also divided into a large number of players, the majority of which are small and medium-sized, and invest less than 1% of their revenue in R&D, as against 6-8% by MedTech global leaders, limiting the ability of the sector to shift up the value chain to complex high-margin devices.

In this context, the Union Cabinet has approved the National Medical Devices Policy (NMDP) 2023 on 19th April 2023 and the Department of Pharmaceuticals (DoP) has notified it on 2nd May 2023. The goal of the policy is to turn the $11 billion import-dependent industry, which accounts for only 1.5% of the world market, into a globally competitive, self-reliant manufacturing firm. It aims to achieve universal access to quality medical devices, to increase the affordability and clinical effectiveness of medical devices, to support innovation, to make domestic supply chains more resilient, and to create a skilled workforce.

The policy aims to benefit the whole medical device value chain, including medical device manufacturers, regulatory bodies, academic/research institutes and patients, and does not set a firm implementation timeline, but instead a long-term roadmap (accelerated growth 2030 and a 25-year vision).

2.Functioning

The NMDP 2023 is being carried out across six main strategy areas, namely regulatory streamlining, enabling infrastructure, R&D & innovation, investments, human resource development and brand positioning/export promotion. Institutional support to the policy is provided by the DoP under the Ministry of Chemicals and Fertilizers and the Central Drugs Standard Control Organisation (CDSCO) remains responsible for regulating the safety, quality and performance of devices under the Medical Devices Rules, 2017.

A proposed ‘Single Window Clearance System’ is set to streamline the licensing process by making it easier to coordinate across the stakeholders including the Atomic Energy Regulatory Board (AERB), Ministry of Electronics and IT (MeitY) and the Department of Animal Husbandry and Dairying (DAHD), while the Bureau of Indian Standards (BIS) is slated to further increase the standards for detecting the quality of devices.

From a funding perspective, the policy is not a single scheme, but is complemented by three schemes under DoP namely Production Linked Incentive (PLI) Scheme for Medical Devices outlaying Rs. 3420 crore / ~$453 million for four target segments of the medical device industry (cancer care/radiotherapy, radiology imaging, anaesthetics and cardio-respiratory devices, implants) over the period of FY2020-21 to 2026-27.

The Scheme for Promotion of Medical Device Parks has four sanctioned parks in Himachal Pradesh, Madhya Pradesh, Tamil Nadu and Uttar Pradesh, and finally the Strengthening of Medical Device Industry scheme with provision of common testing infrastructure, in addition to creating a Centre of Excellence at NIPER Ahmedabad with an outlay of Rs. 110 crore. Public-Private Partnerships and Venture Capital Funding are promoted to back Make in India, Ayushman Bharat and Heal-in-India initiatives.

3.Performance

The policy has made visible gains in its execution system, PLI, three years after it was implemented, and at the same time yielded a countervailing effect: absolute growth in the medical device import bill despite increased domestic production.

Three more rounds of applications were conducted under the Scheme for Promotion of Medical Devices (SPMD) for the category-B with lower investment and sales parameters to broaden the base of application, before the launch of a second, narrower instrument, Scheme for Strengthening of Medical Device Industry (SMDI), with its Marginal Investment Scheme for Reducing Import Dependence and Medical Device Clinical Studies Support Scheme in November 2024, to target around ten high-value device categories (MRI systems, pacemakers, continuous glucose monitors, advanced ultrasound and diagnostic analysers) that were not able to achieve import substitution with the original PLI design.

Source: Compiled from Press Information Bureau (2023, 2025), Invest India (2023), India Briefing (2025), Medical Buyer (2025, 2026), IBEF (2026), and DrugsControl Media Services (2026). 

In addition to the greenfield plant mandated by the Energy Conservation (Industrial) Regulations, 2012, the existing plants under Siemens Healthineers, Philips, Allengers Medical Systems, Panacea Medical Technologies and BPL Medical Technologies have been commissioned by the manufacturers. Parliamentary disclosures (Rajya Sabha December 2025) indicate that the scheme has shifted from approval to actual commercial production; but, exports have started to grow significantly. But while some big, established manufacturers continue to dominate the growth party, wider engagement, particularly by MSMEs (those in Category B and below), is still in its early stages, and there is a considerable cross-section of domestic manufacturers, excluding those in the PLI fold, still to be engaged.

Although a number of challenges have been overcome, MSMEs still struggle with challenges like access to financial resources, cost of compliance, high clinical validation and testing, inadequate common testing infrastructure, and inability to comply with international standards like US FDA and EU MDR. These limitations affect their capacity to access higher value manufacturing markets, and could be a drag on the policy’s ultimate goal of establishing a wide range of local manufacturing markets.

4.Impact

Compared to the policy’s own set of 2023 targets, it is not an overwhelmingly strong record, but it is not an overwhelmingly bad one either. On size, growth has been greater than suggested by headline PLI data; in 2020, the market was $11 billion, but in 2025 it is estimated to be $15.2 billion, broadly on track with the original forecast, and independent industry data (Rubix Industry Insights, February 2026) suggests the market will be $50.1 billion in 2030, given the projected CAGR.

But India’s global market share stands at around 1.5-1.6%, significantly lower than the target of 10-12% that it is looking to achieve over the long term in 25 years’ time and not a shortcoming that it should be concerned about in the near term.

The biggest discrepancy from public commitment is on import substitution. The policy was clearly geared towards reducing the dependency on imports to approximately 30% in ‘a couple of years’ from 2023. On the contrary, imports of medical devices jumped 17% year-on-year to nearly ₹89,000 crore during FY 2025-26 and reliance on imports for electro-medical devices including diagnostic imaging and critical-care devices is expected to remain at 60-80%, while PLI has enabled domestic production of MRI and CT scanners in complex categories at the margins.

In other words, the absolute volume of imports is growing even as the domestic ability to provide it grows, due to the fact that overall demand for healthcare is increasing faster than its ability to be provided using domestic resources.  They need advanced components, accurate engineering, and certification by international standards of manufacture that are beyond the reach of the home-made products.

Consequently, domestic manufacturing is growing mostly in lower and mid-tech devices while imports remain significant for high tech segments.This was the very reason the government had to come up with the SMDI scheme in the late part of 2024 an implicit admission that the previous PLI scheme, which was designed for incremental sales and not substitution of components, was not enough.

The aspect where the policy has been more successful is that it has certainly brought regulatory maturity and capacity signalling the risk-based classification by CDSCO is now robust, digital licensing has made things more transparent, and 22 new projects are greenfield manufacturing and not assembly. Though the volume of import-substitution pledged in 2023 is not yet a reality, the pandemic-proven ability to scale device manufacturing in India is being embedded in the institution.

5.Emerging Issues

• Despite the growth in PLI production, volumes are growing at an absolute rate (+17% y-o-y, FY 2025-26) as demand is being met by incremental sales, not by import substitution a structural gap left unfilled by the original PLI design which was based on incremental sales rather than component localisation.
• R&D intensity is low in the sector: Indian manufacturers spend less than 1% of their revenue on R&D as compared to the global MedTech leaders (6-8%) and the lack of alignment with US FDA/EU MDR regulatory standards seriously limits the export competitiveness of Indian manufacturers beyond low- and mid-technology consumables, which still make up the bulk of Indian MedTech export.
• In June 2026, the list of categories of devices for which there are no domestic alternatives at the required specification was expanded to 354 devices, the practical benefit of which is that the Global Tender Enquiry exemption list will be wider. The exemption list is an indicator of how far advanced the capability of high-end domestic manufacturing has got, and there is a clear sign of this in the categories of devices included.
• The level of domestic manufacturing capacity has increased, but there is little sign, thus far, that this has resulted in significantly reduced pricing or increased access to patients. The high cost of imported parts remains a major constraint on high-cost medical devices, and the lack of a comprehensive pricing system and continued reliance on imports have restricted the policy’s immediate potential for reducing device prices. So far, the improvements have been more apparent in increased industrial capacity than in patient level outcomes.
• Common testing infrastructure is still being developed at medical device parks, delays hamper smaller manufacturers that are unable to afford in-house testing and validation, and the domestic industry, with about 800 manufacturers, is scattered outside the PLI group of large manufacturers.
• The Single Window Clearance System (SWCS) in 2023 has been only partially implemented and a proper pricing regulation similar to Drug Price Control Order 2013 is yet to be decided, thus leaving investors and patients with questions on affordability outcomes.

6.Way Forward

Implementation should focus on strengthening backward linkages (focusing on the manufacture of key parts, sensors, raw materials, etc., rather than end-user devices) to bridge the gap between aspiration and reality, and to ensure that PLI and SMDI-led production leads to long-term import substitution, not just sales. The newly launched Marginal Investment Scheme and Medical Device Clinical Studies Support Scheme should be judged based on explicit import substitution parameters over the ten targeted high-value categories within 18-24 months of their launch instead of sales-based parameters used for the original PLI.

An increase in the level of R&D intensity across the sector, as a result of fiscal measures linked to clinical validation by Indian manufacturers based on FDA/EU MDR standards, would help the Indian manufacturers to grow beyond the consumables business into the electro-medical equipment segment, which accounts for about 60% of the current import bill.

Implementing the SWS with definite timelines and speeding up the shared testing infrastructure at the four medical device parks would further enhance the gains from the PLI era to the smaller MSME base. Lastly, providing a clear and time-bound review of NMDP 2023 goals, preferably before 2030, that explicitly balances the projected increase in the import bill with the original 30% dependence-reduction objective, would enable policymakers to adjust objectives in light of the evidence, while maintaining investor confidence in the sector’s long-term direction.

7.References

Department of Pharmaceuticals. (2023). Strategy document on National Medical Devices Policy  2023. Ministry  of Chemicals and Fertilizers, Government of India. https://pharma-dept.gov.in/sites/default/files/Strategy%20Document%20on%20NMDP%202023_0.pdf

Department of Pharmaceuticals. (2023). National Medical Device Policy 2023 [Policy page]. Government of India. https://pharma-dept.gov.in/policy/national-medical-device-policy-2023

Press Information Bureau. (2023, April 26). Cabinet approves the Policy for the Medical Devices Sector. Government of India. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1919984

Press Information Bureau. (2025, December 16). Progress and implementation of the PLI scheme for medical devices [Rajya Sabha reply]. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2204598&reg=3&lang=2

Invest India. (2023). PLI Scheme for medical devices: Unleashing the potential for Make in India, Make for the World. https://www.investindia.gov.in/blogs/pli-scheme-medical-devices-unleashing-potential-make-india-make-world

India Briefing. (2025, December 17). India’s medical devices sector: PLI progress & 2026 outlook. https://www.india-briefing.com/news/indias-medical-devices-sector-pli-progress-2026-outlook-41453.html/

Medical Buyer. (2025, July 23). Under PLI scheme, 21 projects have started manufacturing 54 unique medical devices. https://medicalbuyer.co.in/under-pli-scheme-21-projects-have-started-manufacturing-54-unique-medical-devices/

Drishti IAS. (2023). National Medical Device Policy 2023. https://www.drishtiias.com/daily-updates/daily-news-analysis/national-medical-device-policy-2023

India Brand Equity Foundation. (2026). Medical devices industry in India — Market share, growth & scope. https://www.ibef.org/industry/medical-devices

Medical Buyer. (2026, January 29). Import dependence in medical devices — India’s call for self-reliance and innovation. https://medicalbuyer.co.in/import-dependence-in-medical-devices-indias-call-for-self-reliance-and-innovation/

Drugs Control Media Services. (2026, June 24). Medical device imports surge 17% to ₹89,000 crore in FY 2025-26; domestic manufacturers urge stronger policy push and public procurement access. https://drugscontrol.org/news-detail.php?newsid=45234

Medical Buyer. (2026, June). India revisits its medical device procurement rules, and the stakes are high. https://medicalbuyer.co.in/india-revisits-its-medical-device-procurement-rules-and-the-stakes-are-high/

About the Contributor

Arya Gupta is a Research and Editorial Intern at IMPRI Impact and Policy Research Institute, New Delhi, and a Program Coordinator at Metvy. A fourth-year Economics graduate of Shri Ram College of Commerce (SRCC), University of Delhi, Arya’s research interests include Indian political economy, labour markets, and development policy.

Acknowledgment

The author thanks the IMPRI review team, Pallavi Lad and Harshini, for their comments and guidance on this Policy Update. 

Publisher: Pallavi Lad

Disclaimer: All views expressed in the article belong solely to the author and do not necessarily represent the views or policies of the organisation.

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