The Department of Pharmaceuticals (DoP) has issued draft guidelines for implementation of the provisions of the Public Procurement (Preference to Make in India) Order (PPO), 2017 with respect to public procurement of medical devices.

The DoP has asked the stakeholders to furnish comments and views on this draft guidelines within 21 days.

Earlier, the Department of Industrial Policy and Promotion (DIPP) had issued PPO, 2017 and in order to facilitate the implementation of the order it had identified DoP as the Nodal Department for implementing the provisions of the PPO 2017 relating to goods & services related to pharmaceuticals sector.  Para 3 of PPO, 2017 makes it mandatory for procuring entities to give purchase preference to local suppliers, Para 5 of PPO, 2017 empowers Nodal Ministry to prescribe percentage and the manner of calculation of minimum local content in respect of any particular item relating to Pharmaceutical sector and Para 9 of PPO, 2017 deals with verification of local content. I It is in this regard that the DoP had now issued the guidelines for implementation of the provisions of the PPO, 2017 with respect to public procurement of medical devices.

Regarding the percentage of minimum local content, the guidelines state that medical device industry is a multiproduct industry responsible for provisioning of wide variety of crucial medical products ranging from simple tongue depressors & glucometer strips to large radiology & electronic medical equipments. The medical devices industry can be broadly classified as consisting of medical disposables and consumables; medical electronics, hospital equipment, surgical instruments; implants; and in-vitro devices/diagnostic reagents. Individually there are around 5,000 different kinds of medical devices and it is not practical to prescribe the local content and percentage of preference in domestic procurement for each medical device.

Moreover, DoP is in the process of collecting accurate and reliable data regarding total capacity and production of various categories of medical devices in India, regarding the level of competition in the market in different segment of medical devices and regarding the processes involved in the manufacture of medical devices for prescribing the percentage of minimum local content for each category of medical devices, for purchase of supplies only from local suppliers where the estimated value of procurement is Rs. 50 lakhs or less and for determining the manner of calculation of local content in the medical devices to be procured by the public agencies. The percentage of local content, the manner of calculation of the local content and the provision of supplies to be procured from local suppliers only where the estimated value of procurement is Rs. 50 lakhs or less may be revised after one year or as soon as the relevant data in this regard becomes available whichever is earlier.

However for the time being, based on the present level of the understanding of the medical device market in India and discussion with various industry representatives, the percentages of minimum local content in domestic medical devices for public procurement are prescribed for the various segments of medical devices.  

For medical disposables and consumables, the percentages of minimum local content in domestic medical devices for public procurement have been prescribed at 50 per cent; for medical electronics, hospital equipment and surgical instruments it is 25 per cent; it will be 40 per cent for implants; and 25 per cent for diagnostic reagents/IVDs.

As per the guidelines, purchase preference shall be given to local suppliers by all procuring entities as per provisions laid down in para 3 of PPO, 2017 subject to the condition that para 3(a) of the PPO 2017 shell be applicable only when there are two or more than two local suppliers for any tender of value upto Rs. 50 lakhs and they certify that they can supply the desired medical devices in the required quantities.

Regarding the manner of calculation of local content, the guidelines state that local content of medical device shall be computed on the basis of the cost of domestic components in the device compared to the total cost of the device. The total cost of product shall be the cost incurred for the production of the medical device including direct component i.e. material cost, manpower cost and overhead costs including profit but excluding taxes and duties. The determination of local content cost shall be based on the fact that in the case of direct component (material), based on the country of origin and in the case of manpower, based on domestic manpower.  The calculation of local content of the combination of several kinds of goods shall be based on the ratio of the sum of multiplication of local content of each goods with the acquisition price of each goods to the acquisition price of combination of goods.