the ongoing negotiations surrounding the EU-India free Trade Agreement (FTA) could significantly reshape India’s medical device market, potentially lowering costs for hospitals and increasing access to innovation. While the deal isn’t final,its focus on reducing trade barriers and fostering regulatory alignment is poised to impact how medical devices are imported into India.
Currently, imported medical devices typically face basic customs duties of 7.5-10%, excluding additional surcharges. Even a partial reduction in these tariffs under the FTA could improve landed costs by 5-12%.In a price-sensitive market like India, this difference is crucial, especially for expensive equipment, implants, and advanced diagnostic tools.
however, this isn’t expected to trigger a price war. Instead, the benefit will likely provide distributors with more flexibility, allow for more competitive bidding in tenders, and open the door to innovative pricing models, such as bundled services or outcome-based payments.
Hospitals could see improved earnings before interest, taxes, depreciation, and amortization (EBITDA), as medical devices represent their second-highest expense after real estate. This impact extends to the growth of indigenous medical device manufacturers in India, potentially expanding access to locally produced options.
Regulatory Harmony: The Real Advantage
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The most significant benefit of the FTA lies in potential regulatory convergence. The agreement is expected to establish mechanisms for cooperation, which could simplify the approval process for medical devices already certified to EU standards (CE-marked). This could reduce the need for duplicate testing, accelerate approval timelines, and lower compliance costs, particularly for higher-risk devices in Classes C and D.
For European manufacturers, this means eliminating redundant processes. For Indian hospitals, it translates to quicker access to cutting-edge medical technologies without compromising patient safety.
Supply Chain Efficiency and Working Capital
Often overlooked, customs facilitation provisions can significantly improve supply chain efficiency. Clearer classification standards, predictable valuation methods, and faster dispute resolution processes can minimize port delays and reduce inventory buildup.
This translates to improved cash flow for importers and distributors and greater reliability for hospitals that rely on timely access to critical medical devices.
Building Trust and Protecting Innovation
European medical devices already have a strong reputation for quality in India. The FTA reinforces this perception by strengthening intellectual property protections and aligning quality expectations. This is particularly critically important in specialized areas like orthopaedics, cardiology, and implantable devices, were clinicians and procurement committees prioritize trust and reliability.
As Indian healthcare increasingly emphasizes patient outcomes, implant longevity, and medico-legal considerations, this trust factor becomes even more critical.
Beyond Assumptions: Localisation is Key
It’s unlikely the FTA will automatically favor EU imports. India’s price controls, public procurement policies favoring domestic manufacturers, and Production-Linked Incentive (PLI) schemes will continue to support local production. EU companies that succeed will view the FTA as a stepping stone-using imports to establish a market presence,followed by local assembly,service infrastructure,and ultimately,manufacturing facilities.
The EU-India FTA won’t fundamentally alter the Indian medical device market overnight. Instead, it reduces friction, creating opportunities thru lower costs, faster access, and increased trust. Though, strategic execution and a commitment to localisation will ultimately determine who capitalizes on these opportunities.
