India’s medical technology industry is facing a sharp escalation in costs, with input prices rising by as much as 50% due to geopolitical tensions in the Strait of Hormuz. The disruption of key global shipping routes has significantly impacted supply chains, triggering widespread concern across the healthcare ecosystem.
Raw Material Inflation Squeezes Margins
Industry bodies report a steep increase in the cost of essential raw materials, particularly plastics, which have surged nearly 50%. At the same time, gas prices—critical for manufacturing and energy-intensive processes—have doubled in recent weeks.
These cost pressures are severely affecting manufacturers of low-margin, high-volume products such as syringes and catheters. Domestic polymer suppliers have also introduced repeated price hikes, with polypropylene and polyethylene witnessing sharp upward revisions, further intensifying the burden on producers.
Supply Chain Disruptions Raise Risk of Shortages
While companies are currently relying on existing inventory buffers to manage short-term disruptions, delays of one to three weeks in shipments are already being reported. If the crisis persists, industry experts warn of potential production slowdowns and shortages of critical medical supplies in hospitals.
Many manufacturers are temporarily absorbing the increased costs to avoid passing the burden onto patients. However, this approach is unlikely to remain viable if volatility continues.
GST Structure Adds Financial Strain
The situation is further compounded by India’s inverted GST structure in the medical devices sector. Manufacturers pay 18% tax on inputs but can only levy 5% on finished products, leading to a growing accumulation of unutilised input tax credits and significant working capital pressure.
Industry stakeholders are now urging the government to expedite GST refunds—ideally within seven days—and provide immediate liquidity support to sustain operations. Without intervention, the sector risks widespread disruption and potential job losses affecting over five lakh workers.
A Sector Under Pressure
With geopolitical instability showing no immediate signs of easing, India’s MedTech industry stands at a critical juncture. Prolonged supply chain disruptions could not only inflate healthcare costs but also impact the availability of essential medical devices, posing a serious challenge to patient care and hospital operations nationwide.