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regarding laws, tariffs, taxes, and procedures.
Companies that manufacture for export only, or primarily for export, benefit from the Ministry of Commerce’s
Export-Oriented Unit (EOU) plan. The import of raw
materials and capital goods is duty free, and locally procured raw materials and capital goods can be purchased
without paying excise taxes on them. The government also
compensates exporters for indirect taxes on both local and
foreign resources. In order to qualify, the company must
cross a threshold value with its exports. The company must
also be registered with the Federation of Indian Export
Organizations (FIEO) and the Ministry of Commerce.
Choice of State
Device makers wishing to take advantage of the government’s incentives should carefully consider where to locate
a manufacturing plant. This critical decision should be
evaluated not only from logistical and cost viewpoints,
but also in terms of the attitude that the concerned state’s
government takes toward industry. Certain Indian states
are keen to promote manufacturing and want to make it
easier for companies to obtain developed land. The land
could be within a government or private industrial park,
an Export Processing Zone (EPZ), or a Special Economic
Zone (SEZ). Some states have Pharmaceutical SEZs but
restrict them to chemical production, so device factories
may not qualify. However, Tamil Nadu in South India has
plans to establish a Pharmaceutical and Medical Device
Zone and other states are likely to follow its lead.
Besides land, the state government can take an active role
in giving various clearances related to building, pollution
control, electricity, water supply, and registration under
labor laws. The state’s drug control (SDC) authorities play
a key role in drug and device regulation. It is advisable for
a company to locate in a proindustry state and to maintain
contacts with its department of industries before and during the construction of a facility to minimize delay.
Regulation of Devices
The principal legislation for drug and device products in
India is the Drugs and Cosmetics Act of 1940 (DCA). Both
state and national authorities share the work of medical
regulation. Under the DCA, there is no definition of “
devices.” All regulation is of “drugs,” but there is an amendment to the DCA under review that would define devices
and create a central drug authority, similar to FDA, that
controls both drugs and devices.
Over time, several devices have been notified, or referred
to, in the legislation. These include sutures, gauze, syringes,
diagnostic kits, etc. In October 2005, a number of implantable device categories—intraocular lenses, catheters, stents
(drug eluting or otherwise), IV cannulae, bone cements,
heart valves, orthopedic implants, internal prosthetic
replacements, and scalp-vein sets—were regulated as drugs.
Both import and local manufacture of the these devices
require licenses. Although there are slight variations in the
approval process across categories, this article is based on
the rules for the items notified in 2005. By the fall of 2008,
