The Indian Medical Device Industry

M U M BA I S I L I C O N VA L L E Y BA N G A LO RE S I N G A P O RE M U M BA I B KC NEW DELHI MUNICH N E W YO RK
The Indian Medical

Device Industry
Regulatory, Legal and
Tax Overview
March 2017
Copyright 2017 Nishith Desai Associates www.nishithdesai.com

The Indian Medical Device Industry
Regulatory, Legal and Tax Overview
March 2017
MUMBAI SILICON VALLEY BANGALORE SINGAPORE MUMBAI BKC NEW DELHI MUNICH NEW YORK
[email protected]
Nishith Desai Associates 2017

Contents
EXECUTIVE SUMMARY 01
1. INTRODUCTION 02
2. INDIA ENTRY STRATEGIES 04
3. INVESTMENT CLIMATE IN INDIA 05
4. INDIAS POST-TRIPS INTELLECTUAL PROPERTY ENVIRONMENT 06
5. LEGAL AND REGULATORY REGIME 07
I. Authorities 07
II. Licenses Required For Import, Sale, Manufacture And Loan Of
Medical Devices Under The Rules 09
III. Manufacturing A Notified Medical Device In India 10
IV. Importing A Notified Medical Device Into India 10
V. Manufacture/Import Of New Notified Medical Device 11
VI. Clinical Trials 11
VII. Product Standards 12
VIII. Labeling 12
IX. Good Manufacturing Practices (Gmp) 12
X. Penalties 12
XI. Export Import Restrictions 13
XII. Advertising And Sales Promotion 13
XIII. Drugs And Magic Remedies (Objectionable Advertisement) Act, 1954 13
XIV. The Competition Act, 2002 13
XV. Patent Protection 14
XVI. Data Exclusivity 15
XVII. Trademarks 16
XVIII. Government Control Over Prices Of Medical Devices 16
XIX. Medical Device Rules 2017 An Analysis 18
6. TAXATION REGIME 26
I. Direct Taxes 26
II. Indirect Taxes 32
CONCLUSION 35
ANNEXURE A 36
ANNEXURE B 37
ANNEXURE C 38
ANNEXURE D 39
ANNEXURE E 40

Executive Summary
The Indian medical device sector is worth out returns, and determine the degree of profitabil-
approximately USD 5.5 Billion and is growing ity. A peculiar feature of regulation in India is pro-
at 15% CAGR.1 The medical device market is hibition on advertisement or promotion of medical
dominated by imported products, which com- devices claiming diagnosis/cure/mitigation of cer-
prise of around 75% of total sales. The domestic tain notified diseases or ailments.
companies are largely involved in manufacturing
The regulatory framework in India applicable to
low-end products for local and as well as inter-
medical devices borrows heavily from the regulatory
national consumption. Lately, many multina-
framework applicable to drugs. At present, only 15
tional companies have established local presence
types of medical devices are regulated (unfortunately,
by acquiring established domestic companies or
as drugs). The rest are unregulated. After a lot of
starting a new business.
efforts of various stake holders, the government has
There are few key factors about operating in India that notified the Medical Device Rules, 2017, which are
every serious player should be aware of. Foreign Direct to come into effect from the 1st of January, 2018
Investment in medical device manufacturing sector is unless a different date is notified. These rules will
now possible without any prior approval. The Indian regulate a much larger set of medical devices under
legal regime is robust and promotes innovation and a framework customized for medical devices. This
commerce. Being a signatory to the TRIPS Agreement should boost the confidence of all stakeholders,
(Trade-Related Aspects of Intellectual Property Rights), especially those who have been hesitant to enter into
India todays boast of strong patent, trade mark and Indian market because of lack of regulation.
copyright protection within its territory. India has
In 2017, the biggest challenge that the medical
a competition law regime that ensures a fair playing
devices industry will be facing is that of price control
field to all interested in Indias domestic market.
and the uncertainty about the effect of new Medical
The Indian Government has introduced various fiscal
Device Rules, 2017. Both these themes are discussed
measures to promote research, development, manu-
in the paper in some detail
facturing and import of medical devices. There is no
.
import duty on certain medical equipment. Similarly,
Overall, it should come as surprise to no one that the
a number of lifesaving medical equipment are exempt
Indian medical device industry presents an exciting
from payment of excise duty. The Indian government
opportunity to foreign and domestic players alike. It
has incentivized scientific research and development
is hoped that this research paper will act as a guide to
by providing weighted deduction.
all stakeholders.
The Indian consumer mindset and local business

practices are unique, and must be carefully studied
while developing a business model. Certain laws,
such as the foreign exchange regulations and the tax
statute must also be assessed in-depth because they
affect the ability of the investor to invest and draw
1. Medical device industry: Realizing the Make in India opportu-

nity, a report by FICCI
1
Provided upon request only
1. Introduction
The approximate USD 5.5 Billion worth Indian Economic growth leading to higher disposable
medical device sector is Asias fourth largest market, incomes
and presents an exciting business landscape and
opportunities for both multi-national and domestic Increased Public Spending in Healthcare
players. Till the early 1990s, the medical device sector
Increased Penetration of Health Insurance
was significantly dominated by domestic players.
But after India opened up its markets in 1991, tables Improving Medical infrastructure
have turned. The technological advancement and
expertise that the global market leaders offered has Increasing affordability due to growing income
proved to be an advantage. Today, Indias medical
Increasing number of ailments
device sector is dominated by multi-national
companies, which is evident from the fact that Increasing demand due to Medical tourism
about 75% of the sales are generated by imported
The sector is also witnessing strong Foreign Direct
medical devices. The domestic players, on the other
Investments (FDI) inflows, which reflects the
hand, were quick to adapt the winds of change and
confidence of global players in the Indian market. As
started to focus on low cost devices. It will come as a
per official data, the medical and surgical equipment
surprise to many that the domestic players in India
sector received a total of INR 8344 Crore (approx. USD
export more than 60 percent of their output as Indian
1452 Million) between 2000 and 20162. In 2013 alone,
markets are dominated by such imported medical
the FDI inflow was almost INR 920 Crore (approx. USD
devices. Over the years, many multi-nationals have
138 Million). In 2015, this number jumped to a new
set up operations in India. However, the nature
high of INR 1019 Crore (approx. USD 153 Million).3
of majority of the operations is to only distribute
imported devices and provide support function. Few
The major players in Indian market are
multi-nationals have started domestic production
(in no particular order): Hindustan Syringes &
too. Some multi-nationals have also entered India
Medical Devices, Opto Circuits (India), Wipro
by acquiring domestic manufacturers. For example,
GE Healthcare, 3 M, India Medtronic, Johnson
in 2008, Netherland-based Royal Philips Electronics,
& Johnson, Becton Dickinson, Abbott Vascular,
a leading manufacturer of General X-Ray acquired
Bausch & Lomb, Baxter, Zimmer India, Edwards Life
Alpha X-Ray Technologies, a leading manufacturer of
Sciences, St. Jude Medical (now a part of Abbott),
cardiovascular X-Ray systems.
Stryker, Baxter, Boston Scientific, BPL Healthcare
India, Sushrut Surgicals, Trivitron Diagnostics,
The sector is at present growing at around 15%
Accurex Biomedical, Biopore Surgicals, Endomed
Compound Annual Growth Rate (CAGR) for
Technologies, HD Medical Services (India), Eastern
a plethora of reasons. A significant percentage of
Medikit, Harsoria health care, Nidhi Meditech
purchasers of medical devices are private medical
System, Philips Medical, Wipro Technologies, HCL
institutions and hospitals. Due to increased
Technologies and Texas Instruments.
competition in Tier I cities, private enterprises have
started to focus on Tier II and Tier III cities, a market
Some of the major industry associations are:
which is until now untapped in India. As private
Advanced Medical Technology Association
enterprises expand in lesser explored markets,
(ADVAMED), Association of Indian Medical Device
the demand for medical devices will expand
proportionally. Other reasons for strong growth 2. Department of Industrial Policy and Promotion; Cumulative
prospects of the industry are: FDI Flows into India; available at: http://dipp.nic.in/English/Pub-
lications/FDI_Statistics/2016/FDI_FactSheet_April_Sep_2016.
pdf
3. http://dipp.nic.in/English/Publications/SIA_Newsletter/2016/
jan2016/index.htm
2 Nishith Desai Associates 2017

Industry (AIMED), NATHEALTH, Association of meaning there is no government oversight on its man-
Diagnostics Manufacturers of India, All India Plastics ufacture, import, distribution and sale. The Medical
Manufacturers Association, Medical Disposables Device Rules, 2017, which is to come into effect from
Manufacturers Association, Society of Biomaterials & 2018, is expected to fill the legislative void that is cur-
Artificial Organs, National Biomedical Engineering rently present, due to the absence of a medical device
Society and Medical Surgical and Healthcare specific legislation in India.
Industry Trade Association.
The multi nationals looking to invest in the Indian
One peculiar feature of the Indian medical device sec- medical device sector must strategize their entry
tor is that it is largely unregulated. The Indian govern- on the basis of certain key factors which will influ-
ment has regulated only a few types of medical devices. ence profitability of the investment. These key fac-
All other types of medical devices are unregulated, tors are listed and discussed next.
3
2. India Entry Strategies

Multinational medical device companies or investors
seeking to do business with Indian medical device
companies need to appraise and structure their activi-
ties on three pillars:
Strategy Law Tax

Observing the economic and political Exchange Control Laws: Primarily the Foreign Domestic Taxation Laws: The
environment in India from the perspective Exchange Management Act, 1999 and numer- Income Tax Act, 1961; indirect
of the investment ous circulars, notifications and press notes tax laws including laws relating to
issued under the same value added tax, service tax, cus-
toms, excise
Understanding the ability of the multi- Corporate Laws: Primarily the Companies International Tax Treaties: Treaties
national company or an investor to carry Act, 1956, the Companies Act, 2013 and the with favorable jurisdictions such
out operations in India, the location of its regulations laid down by the Securities and as Mauritius, Cyprus, Singapore
customers, the quality and location of its Exchanges Board of India (SEBI) and the Netherlands
workforce
To strategize the business model by iden- Sector Specific Laws: Drugs & Cosmetics
tifying the correct modality to do business Act, 1940 and the Drugs & Cosmetics Rules,
in India 1945, The Patents Act, 1970 and other legis-
lations, regulations and guidelines that affect
the medical devices industry
To be aware of the legal framework is another

Doing business in India is as big a challenge as it is an
must. Specifically, investors must keep an eye on
opportunity. The sensitive healthcare sector in India
the exchange control laws as they govern how
has long been conservative about foreign investment
profits made by the company can be realized out of
over concerns of foreign influence over health
India. Many a times, if the investment is structured
priorities of domestic manufacturers. However,
through favorable tax jurisdictions, it may lead to
in recent times, there is growing governmental
significant tax-savings. Lastly, if a multi-national
and popular support for foreign investment in all
company is operating a wholly owned subsidiary
sectors, including health. It is, therefore, significant
in India, it must be make sure that the subsidiary is
to observe the political and economic environment
compliant with the regulatory framework and other
of India. It is equally important to understand the
product liability related laws to avoid any unpleasant
business culture and consumer mindset prevalent
legal proceedings.
in India. Companies that are quick to adapt to it turn
out to be more profitable.

3. Investment Climate In India

By and large FDI is now permitted in almost all the c. investigation, replacement or modification or
sectors in India without obtaining prior regulatory support of the anatomy or of
approvals (i.e. under the automatic route) barring a physiological process;
some exceptional cases like defense, housing and
d. supporting or sustaining life;
real estate, print media, etc. (referred to as the
negative list). If the FDI is not in accordance with
e. disinfection of medical devices;
the prescribed guidelines or if the activity falls under
the negative list, prior approval has to be obtained f. control of conception,
from the Foreign Investment Promotion Board
and which does not achieve its primary
(FIPB) (approval route).
intended action in or on the human body or
FDI in manufacturing of medical devices is animals by any pharmacological or immuno-
permitted to the extent of 100% under the automatic logical or metabolic means, but which may
route. For the limited purpose of FDI Policy, Medical be assisted in its intended function by such
device is defined as follows; means;
Medical device means; ii. an accessory to such an instrument, apparatus,

appliance, material or other article;
i. any instrument, apparatus, appliance, implant,
material or other article, whether used alone iii. a device which is reagent, reagent product, cali-
or in combination, including the software, brator, control material, kit, instrument, appa-
intended by its manufacturer to be used specially ratus, equipment or system whether used alone
for human beings or animals for one or more of or in combination thereof intended to be used
the specific purposes of- for examination and providing information for
medical or diagnostic purposes by means of in
a. diagnosis, prevention, monitoring, treatment
vitro examination of specimens derived from the
or alleviation of any disease or disorder;
human body or animals.4
b. diagnosis, monitoring, treatment,

However the definition above would be subject to
alleviation of, or assistance for, any injury or
the amendment in Drugs and Cosmetics Act. for
handicap;
manufacturing of medical devices.
4. Department of Industrial Policy and Promotion, Ministry of

Commerce and Industry,Government of India Consolidated FDI
Policy, (Effective from May 12, 2015)
5
4. Indias Post-Trips Intellectual Property

Environment
In March 2005, new patent laws were passed in India in India. Computer software companies have success-
to comply with World Trade Organization (WTO) reg- fully curtailed piracy through court orders. Computer
ulations and, specifically, the Trade Related Aspects databases and software programs, which are widely
of Intellectual Property Rights Agreement (TRIPS). used by the medical devices industry, have been pro-
Prior to the adoption of TRIPS, protection of intellec- tected under copyright. Computer programs having
tual property rights (IPRs) in India were of concern technical application to industry and computer pro-
to global and medical device companies seeking to grams in combination with hardware can be now be
enter India. Post-TRIPS, India has well-established patented in India. Though trade secrets and know-
statutory, administrative, and judicial frameworks how are not protected by any legislation, they are pro-
to safeguard IPRs. A patented invention (including tected under the common law and through contrac-
products) is now given 20 years of protection in India. tual obligations. The courts, on the ground of breach
Well-known international trademarks such as Volvo of confidentiality, accord protection to confidential
and Whirlpool have been protected in India through information and trade secrets.
judicial decisions even when they were not registered

5. Legal And Regulatory Regime

As referred to in the introduction, the medical devices
industry in India is currently largely unregulated I. Authorities
because of the absence of a medical device specific
legislation specifying standards of safety and quality
The Central Government and the State Govern-
for most of the medical devices. However, this is set to
ments are responsible for the enforcement of the Act.
change with the introduction of the Medical Device
The Central Drugs Standard Control Organization
Rules, 2017, which is to come into effect from January
(CDSCO), headed by the Drugs Controller Gen-
1st, 2018. Presently, there are certain medical devices
eral of India (DCGI) is primarily responsible for
which have been regulated by creating a statutory
coordinating the activities of the State Drugs Licens-
fiction and deeming these medical devices as drugs.
ing Authorities, formulating policies, and ensuring
By virtue of this fiction, these few medical devices
uniform implementation of the Act throughout India.
get regulated by the Drugs and Cosmetics Act, 1940
The DCGI is responsible for handling matters of prod-
(Act) and the rules framed thereunder viz. Drugs and
uct approval and standards, clinical trials, introduction
Cosmetics Rules, 1945 (Rules). A list of these med-
of new medical devices, and import licenses for new
ical devices is described in ANNEXURE A. They are
Notified Medical Devices as indicated above.
referred to as Notified Medical Devices. It has been
clarified by the authorities vide notification that any
device that does not appear in the said list of Notified
Medical Devices, does not require any registration cer-
tificate or other approvals from the authority.
The Act and Rules seek to:
Regulate the import, manufacture, distribution

and sale of Notified Medical Devices.
Ensure the availability of standard quality Noti-

fied Medical Devices to the consumer.
7
Organisation Chart
Central Drugs Standard Control Organisation
Drugs Controller General (I)

(Dr.G. N. Singh)
Head Quarter Zonal Offices Port/Airport Offices Laboratories

Sub-Zonal Offices (5)
(New Delhi) (6) (13) (6)
Zonal Offices Sub-Zonal Offices Port Offices Laboratories
North Zone:Ghaziabad Banglore Ahmedabad CDL, Kolkata
South Zone: Chennai Chandigarh Chennai Port CDTL, Mumbai
East Zone: Kolkata Goa Chennai Airport CDTL, Chennai
West Zone: Mumbai Jammu Banglore RDTL, Guwahati
Hyderabad Zone Indore Hyderabad RDTL, Chandigarh
Ahmedabad Zone Goa CDL, Kasauli

Head Quarter Kochi
(New Delhi) Delhi *IVRI, Izatnagar
kolkata *NIB, Noida
Kolkata Air Cargo *IPC, Ghaziabad
Mumbai Air Cargo

Mumbai, Navasheva
Mumbai Custom House
Staff Staff Staff Staff Staff
DDC(I) DDC(I) ADCI ADCI Director
ADCI ADCI DI DI Dy. Director
DI DI TDAs TDAs Sr. Scientific Officer I
TDAs TDAs Supporting Staff Supporting Staff Sr. Scientific officer II
Supporting Staff Supporting Staff Research Officer

Sr.Scientist Assistant
Jr. Scientist Assistant
Supporting Staff
Abbreviations: CDSCO- Central Drugs Standard Control Organ-

isation; CDL- Central Drug Laboratories; CDTIL- Central Drug
Testing laboratories; RDTL- Regional Drug Testing laboratories;
IVRI- Indian Veterinary Research Institute; NIB- National Institute
of Biologicals; IPC- Indian Pharmacopoeia commission; DDC(I) -
Deputy Drugs Controller (I); ADC(I)- Assitant Drugs Controller(I);
DIs- Drugs Inspectors; TDAs- Technical Data Associates

II. Licenses Required For licenses or permissions, as the case may be. In
specific instances such as manufacture or import
Import, Sale, Manufac- of new Notified Medical Devices (discussed later),
ture And Loan Of Med- both, a permission from the central drug licensing
authority and a license from the state drug licensing
ical Devices Under The authority is required. The required licenses and
permissions are described more specifically in the
Rules table below.
The regulation of Notified Medical Devices is The Rules have prescribed the standard format of the
overseen by both, the central government and the application forms for relevant licenses for the benefit
state governments. Under the applicable regulatory of the applicants. It has also prescribed the standard
framework, the functions of manufacture, import, form (template) of the licenses that may be issued for
distribution and sale of medical devices require the benefit of the regulatory authorities and the appli-
cants.
License for or Registration Cer- Form (tem- Application Relevant Licensing Timelines (from
tificate plate) of the form Rule Authority the date of
License application)
Certificate of registration of the for- Form 41 Form 40 Rule 24-A Drugs Controller 9 months
eign manufacturer and the medical General of India
devices to be imported (Registration (DCGI)
Certificate)
Import of Notified Medical Devices Form 10 Form 8 Rule 21 DCGI 3 months once Reg-
istration Certificate
I s granted
Import of Notified Medical Devices Form 11 Form 12 Rule 33 DCGI No time period pre-
for examination, test or analysis scribed
Permission to import new Notified Form 45 Form 44 Rule 122-A DCGI No time period pre-
Medical Device for clinical trial or scribed
marketing
Permission to conduct clinical trial Form 45 Form 44 Rule 122-DA DCGI Six months
using new Notified Medical Device
Permission to manufacture/import Form 45 Form 44 Rule No time period pre-
new Notified Medical Device after scribed
satisfactory clinical trials
Retail sale of Notified Medical Form 21 Form 19 Rule 61(2) State Drug No time period
Devices Licensing prescribed (usually
Authority between three to
six months)
Whole sale of Notified Medical Form 21-B Form 19 Rule 61(2) (Same) No time period
Devices prescribed (usually
between three to
six months)
License to manufacture Notified Form 28 Form 27 Rule 76 For Notified No time period
Medical Devices certain spec- prescribed (usually
ified Medical between three to
Devices5 the six months)
DCGI. For other
Notified Med-
ical Devices
the State
Drug Licensing
Authority
9
License to manufacture a Notified Form 29 Form 30 Rule 89 (Same as No time period

Medical Device for the purpose of above) prescribed (usu-
examination, test or analysis when ally between
no manufacturing license under three to six
Form 28 is available. months)
Loan License (manufacture in facil- Form 28-A Form 27-A 76-A (Same as No time period
ity owned by third party) above) prescribed (usu-
ally between
three to six
months)
5
III. Manufacturing A Noti- be submitted to the office of the jurisdictional Joint

Director of Foreign Trade, wherein details of Bank
fied Medical Device In Account Number and Permanent Account Number
India have to be furnished
Under the Act, the activity of import of Notified Medical

Devices into India requires an import license from the
A separate license is required for each manufacturing
office of the Drugs Controller General of India. In order to
location and for each Notified Medical Device at such
get an import license, there is a mandatory requirement of
manufacturing location.
registration of the medical devices sought to be imported,
the name of the manufacturer and its manufacturing
Under the Act, manufacturing includes any process
premises with the office of the DCGI.
(or part) for making, altering, ornamenting, finishing,
packing, labeling, breaking up or otherwise treating or
The registration is certified by grant of a registration certif-
adopting any drug with a view to its sale or distribution.
icate. An application for grant of a registration certificate
However, manufacturing does not include dispensing
may be made by the foreign manufacturer itself if it has
or packing at the retail sale level.
a valid wholesale license for sale or distribution of Noti-
fied Medical Devices under the Rules or its authorized
IV. Importing A Notified agent in India, either having a valid license under the
Rules to manufacture for sale of a Notified Medical Device
Medical Device Into or having a valid wholesale license for sale or distribu-
India tion of Notified Medical Devices in India. Many a times,

foreign manufacturers do not have an Indian subsidiary
which has a wholesale license for sale or distribution
of Notified Medical Devices. Hence, the manufacturers
Importing a medical device into India requires
choose to appoint a third party as an authorized agent to
satisfaction of few additional legal requirements than
make the application for grant of registration certificate.
those indicated above. The import of all products in
The authorization by a manufacturer to its agent in India
India, including medical devices, is governed under
must be documented by a power of attorney.
the provisions of the Export and Import Policy. Before
importing device into India, the importer is required
Other documentation related requirements for import:
to obtain Importer and Exporter Code (IEC) Number
from the office of the Director General of Foreign Trade Free Sale Certificate in country of origin issued by
(DGFT). The IEC Number would be required to be the Ministry of Health/National Regulatory Author-
mentioned in the documents filed with Customs for ity is a pre-requisite; or
clearance of imported goods. For obtaining the IEC
Number, an application in the prescribed form has to Regulatory status of a medical device:
In case of medical devices manufactured in USA,

5. Cardiac Stents, Drug Eluting Stents, Catheters, Intra Ocular Lenses,
USFDA approval for manufacture and free sale
I.V. Cannulae, Bone Cements, Heart Valves, Scalp Vein Set, Orthope-
dic Implants, Internal Prosthetic replacements.

As regards medical devices manufactured in Aus- VI. Clinical Trials

tralia, Japan and Canada, approval for manufac-
ture and free sale
The applicable regulatory framework for clinical trials
In case of medical devices manufactured in is drug-trial specific. There is no medical device specific
European Countries, CE certification along with
regulatory framework for clinical trials in India. The
approval for manufacture and Free Sale Certificate
DCGI, who regulates clinical trials, is aware of this fact
and has therefore, allowed for some tweaking in the
Other countries: approval for manufacture and
drug-specific clinical trial regulatory framework to suit
free sale in the respective country of origin
medical devices. For example, the DCGI has exempted
alongwith approval from any one of the follow-
Phase I clinical trials of medical devices. A number of
ing viz. USFDA/TGA Australia/Health Canada/
manufacturers of Notified Medial Devices are inter-
Ministry of Health, Labour and Welfare Japan or
ested in carrying out post-marketing observational
CE Certification is to be submitted.
study of medical devices. The core difference between
an observational study and a clinical trial is the degree
V. Manufacture/Import of interference of the manufacturer in both the scien-
Of New Notified Medi- tific studies. In observational studies, the manufacturer

does not interfere in the use of the device by the subject
cal Device but in a clinical trial, the manufacturer sets out the way
(design) in which the device would be used. There is no
requirement to obtain any permission for an observa-
A new medical device is a medical device which tional study, but permission would be required to carry
falls into the Notified Medical Device category, but out a post-marketing clinical trial.
which does not have a predicate Notified Medical
India witnessed significant increase in the conduct of
Device registered (for import) / approved (for man-
clinical trials due to the advantages India was offering
ufacture) in India. A predicate Notified Medical
some time ago such as speedier clinical trials, large
Device is one which is registered / approved in India
treatment population sharing diseases with the West,
and has the same indications/ intended use, mate-
trained medical experts, insignificant language barrier
rial of construction and design characteristics as
and cost. However, the clinical trials are on decline for
the device which is proposed for registration in
two years due to regulatory issues. The sector has wit-
India. Notified Medical Devices for which predi-
nessed intense media scrutiny in recent times owing to
cate devices are not registered in India are classified
allegations made by some non-governmental organiza-
as new medical devices. These medical devices
tions that the present regulatory framework provides
are referred to the Medical Device Advisory Com-
inadequate protection to clinical trial subjects.
mittees (MDAC) to comment on safety, effective-
The Supreme Court of India has issued certain guide-
ness, essentiality and desirability of proposed New
lines to increase administrative oversight and to
Devices before the new medical device may be regis-
strengthen protection of interests of clinical trial sub-
tered/approved. The importer/manufacturer of such
jects. However, the turn of events has led to over-scru-
new medical device may be required to furnish clin-
tinization and administrative delays. In January 2013,
ical data to satisfy the MDAC. It is noteworthy that
India formalized compensation rules which obligate
if the new medical device is not marketed in any of
the sponsor or sponsors representative in India to pay
the following markets viz. USA, Europe, Japan, Can-
for clinical trial related injury or death and for medical
ada or Australia, then the marketing permission of
management of trial subjects.
such a device would depend on results of the local
clinical trials conducted in India.
11
VII. Product Standards to other countries are exempted from certain labe-
ling requirements and are instead required to adopt
the requirements of the law to which the device is
No Notified Medical Device can be imported, manu-
being exported. The labelling requirements for med-
factured, stocked, sold or distributed unless it meets
ical devices under the Rules have been described in
the quality and other standards defined in the Act
ANNEXURE B and ANNEXURE C.
and Rules. For instance, Schedule R-1 of the Rules
has prescribed standards for the following Sterile
The Legal Metrology (Packaged Commodities)
Disposable Hypodermic Syringes, Sterile Disposable
Rules, 2011, which are applicable to all medical
Hypodermic Needles and Sterile Disposable Perfu-
devices, have identical requirements. One important
sion Sets. Similarly, Schedule M-III of the Rules lays
additional requirement prescribed by the said rules
down a Quality Management System (QMS) that
is to publish the name, address, telephone number,
is to be followed during the manufacture of medical
e-mail of the person or office to contact in case of
devices and in-vitro diagnostics.
consumer complaints.
It is noteworthy that the Central Government has

All labels may be printed in English
the power to prohibit the import, manufacture
or sale of any Notified Medical Device. The Cen-
tral Government considers banning those medical IX. Good Manufacturing
devices which are removed from the markets of two
or more countries where they were being marketed.
Practices (Gmp)
VIII. Labeling Schedule M -III of the Rules prescribes a QMS

for manufacture of Notified Medical Devices and
in-vitro diagnostics in India. Every company man-
Before a Notified Medical Device is sold or ufacturing Notified Medical Devices in India has to
distributed in India, it must be labeled according comply with the QMS provisions of Schedule M-III
to specifications outlined in the Rules. All medical as a condition of its manufacturing license, else it
devices sold in retail or wholesale package should are may lead to cancellation or suspension of the manu-
required to comply with the labelling requirements facturing license.
of The Legal Metrology (Packaged Commodities)
Rules, 2011.
X. Penalties
In relation to Notified Medical Devices, the Rules
prescribes the contents of the label such as name of The Ministry of Health and Family Welfare,
the medical device, the details necessary for the user Government of India (Ministry) in the year 2009
to identify the device, statement as to the net con- notified an amendment to the Act that attempts to
tents (in terms of weight or measure), license num- strengthen the existing law against the menace of
ber, dates of manufacture, expiry, applicable storing spurious and counterfeit medical devices in India.
and handling conditions, warnings and precautions,
This amendment has changed certain provisions
the name and address of the manufacturer and the
of the Act that specifically relate to the offences of
address of the premises where the Notified Medical
manufacture and trade of spurious Notified Medical
Device has been manufactured, the batch number,
Devices.
as well as the manufacturing license number under
which it is manufactured (if manufactured in India or
The penalties under the Act were found to be
elsewhere). Imported products must display the expi-
inadequate to act as a deterrent for persons involved
ration date in addition to the import license number.
in offences. The penalties have been significantly
Medical devices that are manufactured for export
enhanced through the amendment for manufacture,

sale, distribution, stocking or exhibiting or offering

XII. Advertising And Sales
for sale or distribution of spurious or counterfeit
Notified Medical Devices to INR 1,000,000 (appx. Promotion
USD 16,667) or 3 times the value of the notified
medical device confiscated, whichever is higher and
Advertising medical devices is strictly regulated. The
imprisonment of not less than 10 years which may
Rules prohibits labeling of Notified Medical Devices in
extend up to life, for spurious or counterfeit notified
a manner that may convey to the intending user that
medical device leading to death or grievous hurt.
the enclosed device may be used for prevention or cure
The entire amount of fine that is realized from the
of certain ailments and diseases specified in Schedule
person convicted for the offence is now paid by way
J of the Rules. Some examples of such diseases and
of compensation, to the person who is the victim of
ailments are: Blindness, Bronchial Asthma, Cataract,
spurious or counterfeit Notified Medical Devices. If
Growth of New Hair, Deafness, Genetic Disorders,
the victim has died due the effect of the spurious or
Improvement in vision, Myocardial Infarction etc.
counterfeit Notified Medical Devices, the relative of
the victim is entitled to receive the same amount by
Please note that while the restriction on labeling
way of compensation.
applies only to Notified Medical Devices, some of the
restriction on advertisement is general in nature and
In case the spurious or counterfeit notified medical
are applicable to all medical devices. These are dealt
device does not lead to death or grievous hurt, then
in detail under the sub-heading of Drugs and Magic
the penalty is a fine of up to INR 300,000 (appx.
Remedies (Objectionable Advertisement) Act, 1954.
USD 5000) or 3 times the value of the notified
medical device confiscated, whichever is higher and
imprisonment of not less than 7 years which may
XIII. Drugs And Magic
extend up to life.
Remedies (Objection-
The Ministry also has set up a whistle blower
policy that aims to reward citizens, who provide able Advertisement)
information on the trade and source of spurious
Notified Medical Devices.
Act, 1954
This legislation earlier applied only to drugs, but its
XI. Export Import application has been extended to medical devices by
Restrictions the Indian Courts. The Act prohibits advertisements
about diagnosis, cure, mitigation or prevention of 54
diseases and listed disorders such as cancer, diabetes,
Imports and exports are regulated by the Foreign epilepsy, leucoderma, paralysis, sexual impotence etc.
Trade (Development and Regulation) Act, 1992 along
with the Customs Act, 1962 and the Export-Import
Policy (EXIM Policy), issued by the Ministry
XIV. The Competition Act,
of Commerce and Industry of the Government of 2002
India. The current EXIM policy also known as the
Foreign Trade Policy covers the period 2015 2020.
The purpose of the EXIM policy is to develop export The growth of medical devices industry, though pro-
potential, improve export performance, encourage tected under several IP laws, raises competition law
foreign trade and create a favorable balance of issues (anti-trust). The need to provide protection
payments positions. to medical device companies for their innovation
is well recognized under the Competition Act, 2002
(Competition Act) however the same is restricted
13
by providing specific inclusions under Section 3(5) of Act carves out an exception for medical, surgical, cura-
the Competition Act. Horizontal agreements in the tive, etc., processes or other treatments for humans
medical devices sector would involve agreements and animals and does not regard them as inventions,
entered at same level between medical device manu- thereby rendering these processes and treatments
facturers to restrict supply/fix prices whereas vertical incapable of being patented. However, the carve out
agreements are entered between players at different does not extend to medical devices. Thus, invention of
levels in the supply chain being manufacturers and a medical device (or process) is granted patent in India.
hospitals in the form of tie-in arrangements.
The patent rights with respect to any invention
Cartels by industry associations have been wide- are created only upon grant of the patent by the
spread across jurisdictions to set standard prices for Patent Office following the procedure established
both stockists and retailers but the same has often by the Patents Act and the Patent Rules. India
led to restricting prices. Although the provisions of follows a declarative system with respect to patent
the Act recognize protection granted under IP legis- rights. Patents are granted on a first to file basis.
lations, yet associations formed to exchange data and The patent application can be made by either
information serving purposes other than protection (i) the inventor or (ii) the assignee8 or (iii) legal
of the right holders could invite possible competi- representatives9 of the inventor.
tion law violations.
Mergers and Takeovers in the medical devices sector

B. Convention Application
have also grown considerably in the past few years.
India, a member of the Paris Convention, has
The Competition Act prescribes the thresholds under
published a list of convention countries under
which combinations shall be examined and states
Section 133 of the Patents Act. The convention
that any combination which causes or is likely to
application has to be filed within one year from the
cause an appreciable adverse effect on competition
date of priority and has to specify the date on which
within the relevant market in India shall be void.
and the convention country in which the application
for protection (first application) was made. A priority
XV. Patent Protection document must be filed with the application. Since
India is a member of the Patent Co-operation Treaty,
The patent regime in India is governed by the Pat- a National Phase Application can also be filed in
ents Act of 1970 (Patents Act) and is supported India, within 31 months from the priority date.
by the Patents Rule, 2003, (Patents Rules). The
Some of the salient features are as follows:
Indian Patents Act provides for patenting of both,
products and well as processes for a span of 20 years.
The term of the patent is 20 years from the date of
priority;
A. Patentability of medical
In infringement suits in relation to process pat-
devices ents, the burden of proof is reversed.
The term Invention is defined under the Patents Act as

a new product or process involving an inventive step6
and capable of industrial application7. The Patents
6. Section 2(1) (ja) of the Patents Act: inventive step means a feature
of an invention that involves technical advance as compared to the 8. Section 2(1) (ab) of the Patents Act: Assignee includes an assignee
existing knowledge or having economic significance or both and that of the assignee and the legal representative of the deceased assignee
makes the invention not obvious to a person skilled in the art. and references to the assignee of any person include references to the
7. Section 2(1)(ac) of the Patents Act: capable of industrial application assignee of the legal representative or assignee of that person.
in relation to an invention means that the invention is capable of being 9. Section 2(1) (k) of the Patents Act: Legal representative means a
made or used in an industry. person who in law represents the estate of a deceased person.

C. Infringement application. However, applicant is not entitled to

institute any proceedings for infringement until the
If a patented invention is made, constructed, used patent has been granted.
sold or imported solely for uses reasonably related
to the development and submission of information
G. Secrecy Provisions10:
required under any law (Indian or foreign) that regulates
such activities, then such acts do not amount to an
Any person resident in India is not allowed to apply for
infringement. This provision, known as the Bolar
grant of patent for any invention unless either of the
provision, allows manufacturers to begin the research
following two conditions is satisfied:
and development process in a timely manner in order to
ensure that affordable equivalent generic medicines can Obtaining written permission of the Controller of
be brought to market immediately upon the expiry of the Patents. The Controller is required to obtain con-
product patent. sent of the Central Government before granting
such permission for invention relevant for defense
D. Parallel Imports purpose / atomic energy. The application is to be dis-

posed of within 3 months. OR
Import of patented products in India from a person

Patent application for the same invention has
authorized by the patentee to sell or distribute the
been first filed in India at least six weeks before
product does not amount to an infringement.
the application outside India and there is no
direction passed under Section 35 for prohibiting /
E. Enforcement restricting publication/ communication of infor-
mation relating to invention.
India has historically been viewed by the global commu-
This section is not applicable to an invention for
nity as a poor patent enforcement territory. Two provi-
which an application for protection has first been
sions have been introduced that are likely to improve the
filed in a country outside India by a person resident
patent enforcement mechanism. The first provision, com-
outside India. However, this provision will apply if
pliant with Article 34 of TRIPS, is Section 104A, which is
the first filing is intended to be made in US, since US
a reversal of burden of proof provision applicable to
applications are required to be filed by the inventors
process patents. Section 104A is an exception to the nor-
and not assignees of the inventors.
mal rule which requires that a patent holder who alleges
infringement should provide proof to any claims or alle-
gations made. As per Section 104A, in any process patent
XVI. Data Exclusivity
infringement suits, the defendant will have to prove that
he has used a process different than the patented process
When the Indian Government began the process of
in order to arrive at an identical product produced by a
introducing the 2nd Amendment to the Patents Act,
patented process. Second, an amendment to Section 108
1970 in 2002, multinational companies approached the
of the Act will enable the court to order seizure, forfeiture
Government with a recommendation to introduce
or destruction of infringing goods and also materials and
a data exclusivity provision consistent with Article 39.3
implements, used for creation of infringing goods.
of TRIPS. However, the Government had refused to
accede to such a request.
F. Rights prior to the Grant
Satwant Reddy committee that was formed to study
and recommend on Data Exclusivity submitted
From the date of publication of the application until
its report in 2008. Recent reports suggest that the
the date of the grant of a patent, the applicant has the
like privileges and rights as if a patent for the invention
10. Sections 35 to 43 of the Patents Act; Can you keep a secret? <eco-
has been granted on the date of publication of the times/2005/Can-you-keep-a-secret-Feb-14-2005.htm>, February 13,
2005
15
Government has accepted the recommendations on Any registered trademark must fulfill certain condi-
data exclusivity and may offer protection against tions. The TM Act 1999 has set forth absolute and rela-
disclosure to the pharma/medical device companies. tive grounds of refusal of trademark registration. These
However, the Government may take some more time grounds are akin to the provisions of the UK Trade Mark
to announce its decision on Protection against unfair Act of 1994. The trademark can be registered even if the
commercial use as the Union ministry of health and mark is proposed to be used in India i.e. even if prior to
the Department Of Pharmaceuticals wants further the date of application no goods have been sold under the
discussions with stakeholders. applied trademark. The term of registration and renewal
is 10 years. Foreign companies can license trademarks
in India under the appropriate license / Registered User
XVII. Trademarks Agreement.
The concept of well-known trademark has been

In India, trademarks are protected both under statutory
recognized under the TM Act 1999. A well-known
and common law. The Trade and Merchandise Marks
trademark prohibits registration of a mark which is
Act, 1940 was Indias first legislation with respect to
merely a reproduction or imitation of a well-known
trademarks and was later replaced by the Trade and
mark - even if used in connection with different goods
Merchandise Marks Act, 1958 (TM Act, 1958). The TM
or services.
Act was further updated in 1999 to comply with TRIPS
and is now known as The Trade Marks Act, 1999 (TM A trademark can be used without registration and can
Act 1999). The TM Act 1999 allows for the registration be protected under common law but not under the
of service marks and three-dimensional marks. India statutory law. Recently Indian courts have held that
follows the Nice Classification of goods and services, copying international names (even if the product is not
which is incorporated in the Schedule to the Rules made in India) is not permissible. Several international
under the TM Act, 1999. Medical devices are covered companies are engaged in trademark litigation in India,
under Class-10. including IBM, Apple, Microsoft, Dunhill, Whirlpool,
Sony and Cartier.
Class 44 covers the services for Medical services,
veterinary services and cosmetics; and Class 42 covers
Scientific and technological services and research and XVIII. Government Control
design relating thereto.11
Over Prices Of Medi-
Class 44: Medical services; veterinary services;
hygienic and beauty care for human beings or
cal Devices
animals; agriculture, horticulture and forestry
In India, a legislation called Essential Commodities Act,
services
1955 (ECA) is invoked when the prices of a commod-
ity or a class of commodities are sought to be controlled.
Class 42: Scientific and technological services and research
The ECA gives power the Central Government to con-
and design relating thereto; industrial analysis and
trol production, supply, distribution etc. of essential
research services; design and development of computer
commodities for maintaining or increasing supplies
hardware and software.
and for securing their equitable distribution and availa-
The TM Act 1999 provides a procedure to search bility under fair prices. Under the ECA, if a commodity
trademarks. It is a prudent practice that often prevents or a class of commodities, for example, medical devices,
potential litigation or opposition to conduct the search is notified as an essential commodity in the Official
for conflicting trademarks (whether registered or Gazette of India, then the Central Government can,
pending) before using or applying for any trademark. amongst other things, fix prices of the medical devices.
However, medical devices have not yet been notified
11. http://support.dialog.com/techdocs/international_class_codes_
as essential commodity. To control prices of medi-
tmarks.pdf

cal devices, the Central Government will have to first unit respectively. This effectively means that no patient
notify medical devices as an essential commodity. (consumer) in India will have to pay more than the afore-
stated amount for purchasing those stents in India. The
Interestingly, drugs as a class of commodities have
importers and manufacturers will also have to structure
been notified as essential commodities. Thus, the Cen-
their margins and business models to meet the fixed price.
tral Government has the power to fix prices of drugs. In
fact, in furtherance of the said notification, the Cen- The price fixation of Coronary Stents may appear at
tral Government has issued an order called the Drug first glance to hurt the interests of the importers and
(Prices Control) Order, 2013 (DPCO), which provides manufacturers of Cardiac Stents and could make
a framework for controlling the prices of drugs. The importers and manufacturers of other medical devices
main objective of the DPCO is to ensure the availabil- wary about a threat of potential price control. However,
ity of essential, lifesaving and prophylactic medicines on a detailed analysis, a very different picture comes out:
specified in National List of Essential Medicines, 2015
1. The government decided to fix prices of Cardiac
(NLEM) at affordable prices. The government agency
Stents only after an expert committee found them
under DPCO, which is responsible for controlling the
to be essential for the Indian population;
price of drugs, is called the National Pharmaceutical
Pricing Authority (NPPA). The DPCO also provides
2. The government held several meetings with manu-
for controlling the prices of non-NLEM drugs in two
facturers, importers, distributors and hospitals and
other situations:
took into account their feedback;
a. If the price of any non-NLEM drug increases by

3. The price data published by the government shows
more than 10% of maximum retail price within
that the price control majorly cuts into the margins
a span of 12 months, then the DPCO gives NPPA
of the distributors and hospitals and may not hurt the
the power to reduce the price to the level of 10% of
margins of manufacturers and importers so much;
maximum retail price for the next twelve months.
4. The reduction in cost of Cardiac Stents could lead
b. By discretion of the NPPA, in public interest and
to increase in demand in Tier II and Tier III cities of
under extra-ordinary circumstances.
India where the population is cost-sensitive; and
The catch here is that the definition of drugs under

5. The manufacturers and importers of Cardiac Stents
ECA refers to the definition of drugs under the
have assured the government that they will con-
Act. The definition of drugs under the Act includes
tinue production and supply at pre-price fixation
medical devices that have been notified by the Central
levels; and
Government (See Annexure D). Thus, the government
is empowered to bring Notified Medical Devices 6. If a medical device is not a Notified Medical Device,
under price control if any of the two situations it will not fall under price control.
referred to above arise. However, all medical devices
Therefore, it may be wrong to give negative connotation
other than Notified Medical Devices cannot be
to all acts of price fixation by the government. The
brought under price control unless medical devices
government appears to have taken into account the
as a class is notified by the Central Government to be
interest of all stakeholders in the process of price
an essential commodity, as discussed above.
fixation of Cardiac Stents.
In 2016, Coronary Stents, which fall under the class of
It is possible for importers and manufacturers of
Cardiac Stents amongst Notified Medical Devices, were
Cardiac Stents and other Notified Medical Devices to
added to NLEM. Accordingly, the price of bare metal
remain profitable despite price control by restructuring
stents, drug eluting stents (DES) (including metallic DES)
their relationships with hospitals and absorbing the
and Bioresorbable Vascular Scaffold (BVS) / Biodegradable
margins which was hitherto shared with distributors
stents was fixed under DPCO to INR 7,260 (approximately
with the help of right documentation.
75 USD) and INR 29,600 (approximately 430 USD) per
17
It is also possible for importers and manufacturers of d. Substances used for in vitro diagnosis
Cardiac Stents and other Notified Medical Device to avail
e. All substances intended to be used for or in the
certain relaxations available in DPCO for patented devices
diagnosis, treatment, mitigation or prevention
and/or devices with specific therapeutic rationale.
of any disease or disorder in human beings or
By using the relaxation, the manufacturers and importers
animals.
of Cardiac Stents could limit the impact of price control.
The most important take-away from the definition of
XIX. Medical Device Rules medical devices is that only those products that are
covered by the definition of medical devices will be reg-
2017 An Analysis ulated by the 2017 Rules.
Unfortunately, since the Act, in which the definition of

The Indian Government has finally introduced the drug includes all the medical devices identified above,
Medical Device Rules, 2017 (2017 Rules). The rules remains unamended, the Rules will continue to apply to
have been drafted with the intention to distinguish all medical devices.
medical devices from pharmaceuticals for the purpose
However, to avoid confusion, the 2017 Rules do clarify
of regulation. The 2017 Rules will come into effect on
that in case of any contradiction between the provisions
January 1, 2018 unless a later date is notified by the
of 2017 Rules and the Rules, the provisions of the 2017
government.12
Rules will have effect.14
The key highlights of the 2017 Rules are:
B. Introduction of risk based

A. Definition of Medical Devices classifications system
Under the 2017 Rules, medical devices mean:13
In tune with the global practice, the 2017 Rules will
introduce a risked based classification system for
a. Specific devices intended for internal or external
regulation of medical devices.
use in the diagnosis, treatment, mitigation or
The classification would be as follows:
prevention of disease or disorder in human beings
or animals which are notified by the government
a. Low (Class A)
from the time to time under the Act. Some
categories of devices have already been notified b. Low Moderate (Class B)
by the government. A list of classes of currently
c. Moderate High (Class C)
notified medical devices is annexed as Annexure D.
d. High (Class D)
b. Specific substances intended to affect the
structure or any function of the human body
The method of classification is described in detail in the
which are notified by the government. At
first schedule of the 2017 Rules (first schedule attached
present, the substances notified are mechanical
as Annexure E). It is important to note that unlike
contraceptives (eg. condoms, intra-uterine devices,
other countries which give liberty to manufacturers/
tubal rings) and disinfectants.
importers to classify their product for the purpose of
registration, the 2017 Rules do not provide this liberty
c. Surgical dressings, surgical bandages, surgical
and the manufacturers/importers will have to follow
staples, surgical sutures, ligatures, blood and
the classification decided by DCGI.15 This classification
blood component collection bag with or without
will be made available on a publicly accessible website
anticoagulant;
12. Rule 1(2) of 2017 Rules. 14. Rule 96 of 2017 Rules.

13. Rule 3(zb) of 2017 Rules. 15. Rule 4(3) of 2017 Rules.

on a later date.16 The classification, once done, appears C. Single window clearance
to be non-appealable.
All applications for import, manufacture, sale or

An example of the difference in regulation on the basis
distribution and clinical investigation, whether to be
of risk-based classification is as follows:
assessed by the DCGI or State licensing authority, will
have to be made through a single online portal of the
The application for license to import Class A or Class
central government. The details of the portal will be
B medical devices from Unregulated Jurisdictions
notified in the near future.
(defined below) can be granted on the strength of
a free sale certificate and either of published safety
and performance data or clinical investigation in the D. Product standards for medical
country of origin. However, an application for import devices
of Class C or Class D medical devices from Unregulated
Jurisdictions can be granted only after its safety and
All medical devices will be expected to conform to the
effectiveness has been established through clinical
following standards, in the same order of relevance:20
investigation in India.
a. A standard notified by central government for the

Unregulated Jurisdictions are jurisdictions other than
medical device specifically or which has been laid
Australia, Canada, Japan, European Union Countries, or
down by the Bureau of Indian Standards (BIS);
the United States of America.
or
Similarly, for applications for grant of license to
b. Where (a) is absent, to a standard laid down by
manufacture - Class A medical devices do not require
International Organisation for Standardisation
prior audit by third party17 or official inspection; Class B
(ISO) or the International Electro Technical
medical devices require prior audit by third party18 but
Commission (IEC),
do not require official inspection, and; Class C or Class
or by any other pharmacopoeial standards; or
D medical devices require prior official inspection.19
c. Where both (a) and (b) are absent, to the validated

Therefore, it is easy to make out Class A medical
manufacturers standards.
devices will enjoy least regulation and Class C or Class
D medical devices will have to face most regulation.
The clarity in products by 2017 Rules is a welcome step
by the government. For much too long, the medical
The application for manufacture of Class A or
device manufacturers and importers suffered because
Class B medical device will be assessed by the State
of absence of clarity on product standards. The Rules
licensing authority whereas the application for
presently states that manufacturers or importers of
manufacture of Class C or Class D medical device
notified medical devices are required to confirm to BIS
will be assessed by DCGI.
standards or in absence of BIS standards, to international
standards and such standards as may be specified.21
There was always a question on which standards would
have to be followed when the BIS standards were not
available. However, the introduction of 2017 Rules is
expected to resolve this issues.
16. Rule 4(4) of 2017 Rules.

17. Rule 20(4)(i). of 2017 Rules
18. Rule 20(5) r/w Rule 20(6)(iii) of 2017 Rules 20. Rule 7 of 2017 Rules
19. Rule 21(1) of 2017 Rules. 21. Schedule R-1 of Rules.
19
E. Certainty and rationalization manufacture, sixty (60) days for import, then such
of timelines approvals shall be deemed to have been granted.27
The government has brought certainty of timelines

F. Perpetual licenses
and has rationalized the time required for obtaining
licenses required to market/manufacture medical The licenses granted under the 2017 Rules shall be
devices. Under the 2017 Rules, an applicant can be perpetual, meaning they will continue to be valid
certain of the time within which its application will unless they are cancelled. In order to save a license
be decided and can also plan the time within which it from getting cancelled, the licensee is required to
can expect an audit or inspection to happen because pay a prescribed license retention fee every five
timelines have been assigned to each regulatory func- years. A delay of ninety (90) days past the five years is
tion. Further, unlike the Rules, the 2017 Rules do not acceptable provided the licensee pays a prescribed late
give any scope to the regulators to extend the time-line fee. However, if the licensee fails to deposit the license
for coming to a decision for any reason whatsoever. For retention fee within the aforementioned time-limit,
instance, in case of license to manufacture Class C or then the license is deemed to have been cancelled.
Class D medical device, the scrutiny of the application
Once a license is cancelled, the licensee will have to
is required to submitted within forty five (45) days of
apply afresh for the license.
the date of the application22, the inspection of the man-
ufacturing site is required to be completed before sixty
Please note that while the license may be perpetual,
(60) days from the date of the application23, the report
if a licensed manufacturer has stopped manufac-
of the inspection has to be forwarded to the applicant24,
turing activity or closed the manufacturing site
and the decision on the application has to be commu-
for a period of thirty days or more, it is obligated to
nicated within forty five (45) days from date of receipt
inform the appropriate licensing authority.28
of the inspection report.25
Similarly, a decision on application to import a med- G. Consolidation of registra-

ical device is required to be communicated within tion certificate and import
9 months from the date of the application irrespec-
license into a single license
tive of whether the foreign manufacturing site is
inspected or not.26
The 2017 Rules have done away with the requirement
The 2017 Rules have also introduced the concept of of a registration certificate for registration of the
deemed approval in the event of non-communication foreign manufacturer, its manufacturing site and the
of a decision, by the relevant authority, in application products. The only regulatory requirement to be able
for approval to undertake major change in licensed to import and market products in India is to appoint
particulars (the subject of major change in licensed an authorized agent in India and apply for an import
particulars is discussed later in detail). If the license through it. The immediate outcome of this
appropriate licensing authority i.e. the DCGI or the change is that the hassle of making two separate
State licensing authority is unable to communicate applications (registration and import license) has
its decision on the aforesaid application within the vanished and the timeline for obtaining the import
stipulated timeline, i.e., forty five (45) days for license (of nine months) has become certain.
Further, it will not be possible for two different

importers to import different products manufactured
22. Rule 21(4) of 2017 Rules at the same manufacturing site. Where an importer
23. Rule 23(1) of 2017 Rules
24. Rule 24 of 2017 Rules
25. Rule 25 of 2017 Rules 27. Rule 26(iii); Rule 38(vi) of 2017 Rules
26. Rule 36(1) of 2017 Rules 28. Rule 26(xii) of 2017 Rules

has been licensed to import certain products from a. Changes in name and/or address of Indian
a manufacturing site, all other products manufac- agent/ Importer or change in constitution after
tured at the same site are mandatorily required to be issue of Registration Certificate/ Import License
licensed to the same importer.29
b. Change in the Indications and/ or Intended use
H. Certainty on consequence c. Change in constitution
of change in particulars Under the 2017 Rules, the above changes (excepting
contained in the license change in constitution) do not require fresh
application.
The 2017 Rules are clear about the consequences
There is one more welcome change.
of change in the particulars of a license. Any major
change requires a prior approval from the appropri-
Under the Rules, it is prescribed that the applica-
ate licensing authority (either DCGI or State licens-
tion for registration certificate for import of noti-
ing authority, as the case may be).30 Any minor
fied medical devices will be decided within nine
change only requires written intimation to the
months35 and for import license the application
appropriate licensing authority within a period of
is customarily decided within three months after
thirty days.31
grant of registration certificate. Thus, on an average,
a total time of around one year is spent in obtain-
What constitutes major change and minor change has
ing the import license. Since it is a considerably
also been specified.32 For instance, the change in name
long span of time, it is possible that certain changes
or address of the manufacturer (whether domestic or
may occur in the details that were submitted to the
foreign) or importer is a major change. A change in
licensing authority at the time of making of the
design which does not affect quality in respect of its
application. For instance, it is possible for business
specifications, indication for use, performance and
reasons that a different manufacturing site is sought
stability of the medical device is a minor change.
to be registered. Ideally, since the application has
This clarificatory inclusion in the 2017 Rules is not been decided, it should be possible for the appli-
greatly welcomed. cant to revise the application. However, the current
practice is that in case of such a change, even if the
At present, the Rules do not specify what constitutes
application has not been decided, a fresh applica-
a major change or a minor change. That is not
tion has to be made.36 Apart from loss of money
all. Whether a change in the manufacturing or in
and resources, this results in loss of valuable time
processing or in testing or in documentation is
and sometime delays imminent and time-sensi-
major or not is left to the discretion of the licensing
tive launch of products. This serious shortcoming
authority and triggers the requirement to make
appears to have been rectified in the 2017 Rules.
a fresh application.33 The challenges of making
Such a change now is required to be informed in
a fresh application are discussed later with the
writing to the licensing authority.37 Due to this
subject of change in constitution.
explicit requirement, it should not trigger require-
ment to make a fresh application.
In fact, at present, it is known that the following
changes will result in the requirement to obtain
a fresh import license:34
29. Rule 34(4)(ii) of 2017 Rules

30. Rule 26(iii); Rule 38(vi) of 2017 Rules by CDSCO.
31. Rule 26(iv); Rule 38(vii) of 2017 Rules 35. Rule 27A(1) Proviso of Rules.
32. Sixth Schedule of 2017 Rules 36. FAQ No. 51 under Import and Registration of Medical Devices
33. Schedule D(I), Para 3.5 of Rules. FAQs published by CDSCO.
34. See Import and Registration of Medical Devices FAQs published 37. Rule 34(2) Proviso. of 2017 Rules
21
I. Meaning of change in Whether or not the above event constitutes a change

constitution finally explained in constitution of the licensee remains an enigma
and change in constitution under the Rules at present.
rationalized Let us understand what the practical challenge is if

the license only remains valid for a period of three
months due to change in constitution. It has already
Change in constitution could easily be the most
been discussed that it takes around a year to obtain
dreaded event under Rules, even more than
an import license under the Rules. It means that after
a serious adverse event. This is because no one
change in constitution, an importer has only three
seems to have any idea about what it means. Having
months at present to import and stock products for
said that, the Rules require that upon its occurrence
domestic market to last for the time when it does not
the license remains valid for three months only.
have an import license i.e. at least nine (9) months.
The licensing authority itself has issued several
This is almost impossible due to production, logistics,
clarifications, FAQs and guidelines over past seventy
storage and commercial considerations. Thus, for
two (72) years but has not clarified what it means.
many importers today, a change in constitution
But worry no more. The 2017 Rules state that means halt of business for close to a year.
change in constitution of a licensee in relation to:38
However, the government seems to have realized this
i. a firm means change from proprietorship to pitfall and has made the process surrounding change
partnership including Limited Liability Partnership in constitution a breeze under the 2017 Rules. Upon
or vice versa; a change in constitution as defined before, a manu-
facturer licensee has forty five (45) days to inform the
ii. a company means-
licensing authority and one hundred eighty (180) days
to make a fresh application.39 An importer does not
a. its conversion from a private to a public company,
even have to inform the licensing authority but sim-
or from a public to a private company; or
ply make a fresh application in the same time-frame.40
b. any change in the ownership of shares of more After making such an application, the existing license
than fifty per cent. of the voting capital in the body is deemed to be valid until the fresh application is
corporate or in case of a body corporate not having decided by the licensing authority. Thus, there remains
a share capital, any change in its membership; and nothing to dread about change in constitution under
where the managing agent, being a body corporate the 2017 Rules.
is a subsidiary of another body corporate, includes a
change in the constitution of that other body corporate;
J. License for sale of medical
Therefore, it is now clear that at least after devices
enforcement of 2017 Rules:
The 2017 Rules do not have separate provisions for
1. Change in directors will not result in change in
sale of medical devices. The provisions related to sale
constitution;
of drugs other than homeopathic medicines under the
Rules will apply to medical devices as if it was inserted
2. Change in shareholding by way of sale/
within the 2017 Rules.41 All licenses for sale of drugs
investment will not result in change in
other than homeopathic medicines issued prior to
constitution; and
3. Change of parent shareholder due to

restructuring exercise will not result in change
in constitution.
38. Rule 3(j) of 2017 Rules 41. Rule 87(1) of 2017 Rules

commencement of 2017 Rules shall be deemed to be it has reasons to believe that a medical device is likely
valid for sale of medical devices as well.42 to pose risk to the health of a user or patient during
its use and therefore may be unsafe. The recall should
The 2017 Rules do, however, address a practical diffi-
aim to withdraw the medical device in question from
culty faced by many distributors in India. Implanta-
both the market as well as patients, indicating reasons
ble medical devices cannot be self-administered and
for its withdrawal. The manufacturer and importer
therefore are seldom bought at retail. They are stocked
initiating recall is required to inform the licensing
by hospitals for clinical use as and when required. The
authority about the details of the recall.
hospitals sell the medical device to the patient directly
on a unit basis or as part of treatment package. How- In contrast, the Rules do not obligate the manufacturer
ever, considering the medical devices are expensive or importer to recall medical devices upon knowledge
and its demand is difficult to predict, hospitals are hesi- of risk to user or patients.45 There is also no explicit
tant to purchase medical devices in large quantities. requirement to report the facts leading to a recall,
At the same time, some of the medical devices are crit- unless the medical device is new and is required to
ical and may be required on short notice, therefore it submit periodic safety update reports and have
is in hospitals and patients interest that the hospital a system of pharmacovigilance in place.46
maintains a large stock of medical devices. As a solu-
tion to this dilemma, the distributors transfer a sizeable
L. New thresholds for residual
stock of the medical devices to the hospital through
a stock transfer. A stock transfer is not a sale, it is
shelf life of imported
merely transfer of stock. As and when the hospital products
requires a medical devices, it uses it from the stock.
The distributor then charges the hospital on the basis The Rules prescribe that all imported products
of its use. All the unused stock is later re-transferred to should have a minimum residual shelf life of sixty
the distributor. The proof of stock-transfer of medical (60) percent on the date of import unless specific
devices by distributor to the hospital is a delivery note. permission is obtained to the contrary.47 This
becomes an issue for importers of medical devices
The Rules requires that any sale or distribution should
which have a short claimed shelf life.
be recorded by the distributor. A stock transfer is not
a sale or distribution, therefore it is not recorded by The 2017 Rules have addressed the issue by relaxing
the distributor. However, the presence of stock at the the residual shelf life requirement for medical
hospital may be interpreted as an act of distribution. devices with short shelf life.48 Any medical device,
This can lead to unnecessary investigation against the whose total shelf life claim is
distributors by the licensing authority.
a. less than ninety (90) days, will be allowed to be
In order to resolve this complication, the 2017 Rules imported if it has more than forty (40) per cent
have permitted supply of implantable medical devices residual shelf-life on the date of import
against a delivery note (challan).43
b. between ninety (90) days and one (1) year, will
be allowed to be imported if it has it has more
K. Mandatory recalls on than fifty (50) per cent residual shelf-life on the
knowledge of risk to safety date of import
The 2017 Rules make it mandatory44 for manufactur-

ers and importers to immediately initiate recall in case
45. Rule 26(v); Rule 74(j); Rule 78(i) of Rules

42. Rule 87(2) of 2017 Rules 46. Schedule Y, Para 3(4) of Rules.
43. Rule 88(1) of 2017 Rules 47. Rule 31 Proviso of Rules.
44. Rule 89(1) of 2017 Rules 48. Rule 47 of 2017 Rules
23
c. is more than one (1) year, will be allowed to be These changes should bring lot of comfort to
imported by the licensing authority if it has stakeholders in the clinical investigation of medical
more than sixty (60) per cent residual shelf-life devices.
on the date of import.
N. Debarment on account of
M. New regulatory framework supply of misleading infor-
for clinical investigation of mation
medical device
The 2017 Rules frown upon submission of mislead-
The 2017 Rules will introduce a new regulatory ing information along with an application for grant
framework for clinical investigation of medical of any license. It prescribes that any applicant found
devices. Some of the interesting provisions of this guilty of submitting misleading, or fake, or fabri-
framework are: cated documents, may be debarred by the appro-
priate licensing authority for such period as it may
a. A fixed timeline of ninety (90) days has been
deem fit.49 In other words, if any misleading or false
prescribed for the licensing authority to arrive
information is found to have been submitted to the
at a decision on application for permission to
licensing authority, then it can debar the applicant
conduct clinical trial;
from doing business in India.
b. After obtaining permission to conduct clinical

The provision appears to be based on the jurispru-
trial, the first subject is required to be enrolled
dence of strict liability. It does not matter whether the
within one year;
applicant knew or intended to submit misleading or
false information. This should act as a wake-up call to
c. New concepts of Pilot Study (i.e. exploratory
importers, manufacturers, distributors and researchers
study) and Pivotal Study (i.e. confirmatory study)
to ensure that all information that is finally submitted
have been introduced with respect to approval of
by it (or on its behalf) is verified prior to submission.
investigation medical device;
d. New concept of substantial equivalence to

O. Medical Devices Rules,
predicate devices has been introduced with
respect to approval of medical devices other
2017 to be placed before
than investigational medical devices; Parliament
e. The clinical performance evaluation of In
The Medical Device Rules, 2017 have been notified
Vitro Diagnostic Devices is now part of the
under the Act. The Act requires that every rule made
regulatory framework;
under it is laid down before each House of Parliament,
for a total period of thirty days. If both Houses agree
f. Any institute, organization, hospital run or
to make any modification in the rules or both Houses
funded by the Central Government or the State
agree that the rule should not be made, the rule shall
Government is exempted from payment of fees
thereafter have effect only in such modified from or
for conduct of clinical investigation; and
be of no effect, as the case may be.
g. Academic clinical trials do not require prior
Thus, the 2017 Rules will soon be placed before
approval of the licensing authority for its
the Indian Parliament. It will be interesting
initiation if the data generated during the study
to see whether the Indian Parliament effects
will not be used for obtaining manufacturing
any modification to the 2017 Rules or rejects it
or import license.
49. Rule 93(1) of 2017 Rules

completely. However, given the political and Q. An opportunity lost

economic scenario, either event seems unlikely.
Though the 2017 Rules have introduced a number

P. Next steps for existing of business friendly provisions, one cannot help but
importers, manufacturers regret that it was an opportunity lost to bring more
and distributors change. The fact of the matter is that even after com-
mencement of the 2017 Rules, medical devices will
continue to be deemed to be drugs, since the defini-
After the commencement of 2017 Rules, all licenses
tion of medical devices is tied to the definition of drugs
and registrations for medical devices issued under the
under Act. This has repercussions under other laws,
Rules that are valid on the date of commencement,
most important of which is the price control legisla-
shall be valid at least until July 31, 2018 or until the
tion the Drugs (Price Control) Order, 2013 issued
expiry date of the license or registration, whichever is
under the Essential Commodities Act, 1955. The Essen-
later (Grace Period). Upon expiry of the Grace Period,
tial Commodity Act, 1955 has notified drugs as defined
all existing licensees will require a license issued under
under Act as essential commodity. Due to the reference
the 2017 Rules. Therefore, there is no need to rush to
to this definition, medical devices which are deemed
adopt to the 2017 Rules. However, it is important to
to be drugs, are also currently subject to limited price
start preparing for the new regulatory regime under
control. Had the government separated the definition
2017 Rules.
of medical devices form the definition of drug, the trag-
edy that inadvertent and unintended price control of
It is not clear whether existing licensees could
medical devices is today would have been avoided.
voluntarily surrender their licenses before the expiry
of the Grace Period in order to obtain a license under
Having said that, there is no doubt that the fact
the 2017 Rules. However, such a step by licensees
of notification of the 2017 Rules and the very real
is not advisable. This is because the license fees
possibility of it coming into effect in 2018 needs to be
paid to obtain the license under Rules is far cheaper
celebrated!
than the license fees prescribed in 2017 Rules. By
opting to surrender the license, the licensee would
effectively end up forfeiting the license fees already
paid and incur expense of higher license fees. In case
the decision to surrender is being contemplated
for taking benefit of the beneficial provisions of
2017 Rules (eg. change in constitution), then such
rationale needs to be re-evaluated because the 2017
Rules clarify that the existing license under the
Grace Period shall be deemed to be valid under the
corresponding provision of 2017 Rules. Therefore,
all existing licensees should be able to derive the
benefit of 2017 Rules during the Grace Period despite
transacting on a license issued under the Rules.
25
6. Taxation Regime
Section 90(2) of the ITA is a beneficial provision which
I. Direct Taxes states that, where the taxpayer is situated in a country
with which India has a double tax avoidance agree-
ment (Indian Tax Treaty), the provisions of the ITA
A. General overview apply only to the extent that they are more beneficial
to the taxpayer. Rules under Indian Tax Treaties are
Taxation of income in India is governed by the provi- generally more beneficial to the taxpayer than those
sions of the Income Tax Act, 1961 (ITA) as amended under domestic law (ITA) and hence it is typically
annually by the Finance Acts. Under the ITA, residents advantageous for a non-resident taxpayer to structure
are subject to tax in India on their worldwide income, his investments or business through a jurisdiction
whereas non-residents are taxed only on Indian source which has signed an Indian Tax Treaty.
income i.e. income that accrues or arises in India, is
In recent times, the Indian income tax authorities have
deemed to accrue or arise in India or which is received
been adopting an aggressive approach to transactions
or is deemed to be received in India. A company is said
where any form of exemption from taxation is sought
to be resident in India if it is incorporated in India or
by the taxpayer. Their approach is even more hostile
its place of effective management (POEM) is located
when the transaction in question has an offshore
in India.50 In this regard, the Central Board of Direct
element to it. Hence, it is has become critical to ensure
Taxes (CBDT) recently released the final guidelines
that offshore transactions are structured in a manner
for determination of POEM. (Please click here to read
such that legitimatetax exemptions are not challenged
our hotline on the same).
by the tax department.
Section 9 of the ITA deems certain income of non-
Before delving into specific tax issues concerning
residents to be Indian source income. Under section
contract research and manufacturing, set out below
9(1), capital gains are considered to have their
is a snap shot of the taxation regime in India. The tax
source in India and are taxable in India if they arise
rates mentioned in this section are exclusive of appli-
directly or indirectly, through the transfer of a capital
cable surcharge and education cess, unless otherwise
asset situated in India. Similarly, the business
specified. As per the Finance Act, 2016, the surcharge
income of a non-resident is taxable in India only if
applicable to income generated by resident compa-
it accrues or arises, directly or indirectly, through or
nies for the financial year 2016-2017 is 7% where the
from any business connection in India.
income exceeds INR 10 Million but does not exceed
The Indian tax rates applicable to non-residents INR 100 Million and 12% where the income exceeds
could be up to 40% (all tax rates provided herein are INR 100 Million. Additionally, as per Finance Act, 2016
exclusive of surcharge and cess discussed below) on surcharge applicable to income generated by compa-
taxable business income and capital gains. nies other than domestic companies, for the financial
year 2016-2017 is 2% where the income exceeds INR
10 Million but does not exceed INR 100 Million and 5%
where the income exceeds INR 100 Million.
50. India introduced the place of effective management (POEM)
test for determining the residential status of a company in 2016.
Under the POEM test, a company is said to be resident in India if
it is incorporated in India or; if its place of effective management
is in India. POEM has been defined to mean the place where key
management decisions that are necessary for the conduct of the
business of an entity as a whole are, in substance made. Until
the introduction of POEM, foreign companies were character-
ized as being tax resident of India only on the satisfaction of the
control and management test, which required that the foreign
companys control and management be wholly situated in India.

i. Taxes Applicable to companies iii. Interest, Royalties and Fees for Tech-
nical Services
Resident companies are taxed at the rate of 30%51,
while non-resident companies are taxed at the rate of
Interest payable to non-residents on loans taken/
40%. A minimum alternative tax is payable by resi-
debt securities issued in foreign currency are taxable
dent, and in certain circumstances, non-resident com-
at a beneficial rate of 5%.53 However this benefit
panies at the rate of around 18.5%. The Indian Finance
has a sunset clause stating that the benefits would
Minister in his budget speech in 2017 (Budget 2017)
only be available for loan agreements entered into/
has proposed to reduce the corporate tax rate to 25%
bonds issued on or after July 1, 2012 and before July
(as opposed to the current rate of 30%) for domestic
1, 2017. The Budget 2017 has proposed to extend this
companies whose total turnover or gross receipts does
benefit to Rupee Denominated Bonds (RDB) and
not exceed INR 500 million (approx. USD 7.4 million).
extend the sunset clause to July 1, 2020. Similarly,
For the remainder of the companies, the corporate tax
interest payable to foreign portfolio investors
rates continue to be 30%.
(FPI) on investments made by them in RDBs and
government securities is taxable at the rate of 5%.54
ii. Dividends Further, the Budget 2017 has proposed to amend
the sunset clause for this benefit as well to state
this it shall be applicable to bonds issued till July
Dividends distributed by Indian companies are
1, 2020 as opposed July 1, 2017. Interest payable on
subject to a dividend distribution tax (DDT) at
majority of other circumstances not covered under
the rate of around 15% (calculated on a gross-up
the abovementioned benefits are taxable at a rate
basis), payable by the company. However, except as
ranging from 20% to 40%.
stated immediately below, no further Indian taxes
are payable by the shareholders on such dividend
Also as regards interest payments made by an Indian
income once DDT is paid. Accordingly, there should
company to its associated enterprises/related party55,
be no withholding tax applicable on the payment of
the Budget 2017 has proposed to introduce Thin
dividends to a non-resident.
Capitalization Rules as per which, interest payments
exceeding 30% of the Earnings Before Interest, Taxes,
Further tax at the rate of 10% is levied on dividends
Depreciation and Amortization (EBITDA) of the
received from a domestic company, by a resident
payer of interest shall not be deductible as an expense.
individual, HUF or firm, where the amount of
dividend received exceeds INR 1 million.52 Budget
The withholding tax on royalties and fees for
2017 proposes to amend this provision by providing
technical services earned by a non-resident is 10%.
that this additional tax rate of 10% should be
These rates are subject to available relief under an
applicable to dividends received by all resident
applicable tax treaty. In this context, it is important
taxpayers except domestic companies, certain kinds
to note that the definition of royalties and fees for
of funds, institutions, trusts, educational institutions,
technical services under Indian domestic law is much
hospital and medical institution as specified in the
wider than the definition under most tax treaties
ITA. Dividends received from a domestic company
signed by India.
by a non-resident company should continue to
be Indian tax exempt in the hands of the foreign
company, provided that DDT has been paid by the
distributing domestic company.
53. Section 194LC, Income Tax Act, 1961

51. All tax rates are applicable to Financial Year 2016-17 and are 54. Section 194LD, Income Tax Act, 1961
exclusive of surcharge and education cess. 55. Section 92A, Income Tax Act, 1961 defines associated enterpris-
52. Section 115BBDA, Income Tax Act, 1961 es.
27
iv. Capital Gains v. Withholding Taxes
Gains earned by a resident company from the Tax would have to be withheld at the applicable
transfer of capital assets situated anywhere in rate on all payments made to a non-resident, which
the world are taxable in India. In the case of non- are taxable in India. The obligation to withhold
residents, only those gains arising out of the transfer tax applies to both residents and non-residents.
of a capital asset in India should be taxable.56 The Withholding tax obligations may also arise with
tax treatment of capital gains depends mainly on respect to specific payments made to residents
whether the gains are short term or long term. Short and the failure to withhold tax could result in tax,
term capital gains (STCG) arise upon the transfer interest and penal consequences.
of assets held by a taxpayer for a period of 36 months
or less before the date of transfer (12 months or less
B. Incentives Under the ITA
in the case of securities listed on a recognized stock
exchange in India, and 24 months in the case of
The Government of India has taken various policy
unlisted shares of an Indian company). Long term
initiatives in order to strengthen scientific research
capital gains (LTCG) arise upon the transfer of
and development in the various sectors, including the
a capital asset held for a period of more than 36
medical device sector. The term scientific research
months (12 months in the case of listed securities
has been defined in the ITA to include activities for
and 24 months in the case of unlisted shares of an
the extension of knowledge in the fields of natural or
Indian company).
applied science. Scientific research can be carried out
either in-house or by contributing to outside agencies
Listed: STCGs arising from the transfer of a listed
engaged in scientific research. Typically, in the
equity share are taxable at the beneficial rate of
medical device industry, fiscal incentives are awarded
15%,57 while long term capital gains arising from
to research and development units towards the
the transfer of listed equity share are tax exempt
development of new technology that adds medical
under the ITA generally.58 This is applicable to both
benefits and for life-saving medical equipment.
residents and non-residents.
Unlisted: STCGs arising from transfer of unlisted

i. In-House Research and Development
securities are taxable at slab rates both in the hands
of residents and non-residents. LTCGs arising out of
Companies that have incurred any expenditure on
unlisted securities are taxable at the rate of (i) 10%
scientific research (not being expenditure in the
in the hands of a non-resident, (ii) 20% in the hands
nature of cost of any land or building) on in-house
of a resident.59
research and development facility as approved
An Indian company would also be taxed at the rate by the Department of Scientific and Industrial
of around 20% on gains arising to shareholders from Research, are allowed a deduction of 200 percent
distributions made in the course of a buy-back or of such expenditure. Expenditure on scientific
redemption of shares. research includes expenditure incurred on medical
device trial, obtaining approval from any regulatory
authority under any Central, State or Provincial
Act and filing an application for a patent under the
Patents Act, 1970. However, the Finance Bill 2016
56. Having said that, India has recently introduced a rule to tax non-
proposes to restrict the rate of deduction to 150
residents on the transfer of foreign securities the value of which percent with effect from 01.04.2017 to 31.03.2020.
are substantially (directly or indirectly) derived from assets
situated in India. Further, the deduction shall be restricted to 100
57. Section 111A, Income Tax Act 1961. percent from 01.04.2020 onwards.
58. Section 10(38), Income Tax Act, 1961.
59. Section 112, Income Tax Act, 1961.

It should be borne in mind here that no company business connection in India. Similarly, under the
would be entitled to the aforementioned deduction Indian Tax Treaties, typically, the business income
unless it enters into an agreement with the Depart- of a non-resident is taxable only to the extent that it
ment of Scientific and Industrial Research for co-op- is attributable to a Permanent Establishment (PE)
eration in such research and development facility of such non-resident in India. The concept of PE
and for audit of the accounts maintained for that under typical Indian Tax Treaties is expressed as an
research and development facility. exhaustive list of factors, as opposed to the business
connection rule contained in the ITA, which has no
Currently, this deduction is available for expenses
exhaustive definition in the ITA and which has been
incurred prior to March 31, 2017.
afforded a wide interpretation by Indian courts in the
past. Therefore, there may be situations where
ii. Contributions made to other a non-resident is considered to have a business
Institutions for Scientific Research connection in India, but no PE. As mentioned ear-
lier, since it is open for the non-resident taxpayer
to choose to be treated under the more beneficial
The ITA provides for a deduction of 200 percent
regime, a non-resident may rely on the PE rule under
of sums paid to any scientific research association
the applicable Indian Tax Treaty rather than the
(having as its object the undertaking of scientific
business connection rule in the ITA.
research), or to any university, college or other insti-
tution, for the purpose of scientific research approved
The term PE has been succinctly defined by the
by the concerned authority. Similar to the position
Andhra Pradesh High Court in the case of CIT v.
in respect of an in-house research and development,
Visakhapatnam Port Trust60, as follows:
the Finance Bill 2016 proposes to restrict the rate of
deduction to 150 percent with effect from 01.04.2017 In our opinion, the words permanent establishment
to 31.03.2020. Further, the deduction shall be postulate the existence of a substantial element of an
restricted to 100 percent from 01.04.2020 onwards. enduring or permanent nature of a foreign enterprise
in another country which can be attributed to a fixed
place of business in that country. It should be of such
iii. Capital Expenditure
a nature that it would amount to a virtual projection
of the foreign enterprise of one country into the soil
Under Section 35(1)(iv) read with Section 35(2)
of another country.
of the ITA, the whole of any expenditure on
scientific research (other than expenditure on The Indian Tax Treaties typically lay down certain
acquisition of any land) being capital in nature, criteria to determine whether a foreign enterprise earn-
incurred after 31 March 1967 is allowed as a ing business income from India would be construed
deduction. Further, under Explanation 1 to to have a PE in India. Some of these tests are discussed
Section 35(2) of the ITA, the aggregate capital below, especially in the context of contract research
expenditure on scientific research incurred three and manufacturing.
years immediately prior to the commencement
of business is allowed as a deduction in the year
i. Fixed Place of Business PE
in which the business is commenced.
A foreign enterprise is deemed to have a PE in India if

C. Potential Permanent the business of foreign enterprise is, wholly or partly,
Establishment Issues carried on through a fixed place of business in India.
Under the ITA, business income of a non-resident

is taxable in India (at the rate of 40%) if it accrues
or arises, directly or indirectly, through or from any 60. 1983 144 ITR 146 AP
29
ii. Service PE that subsidiary company a PE of its parent company.

This follows from the principle that, for the purpose
of taxation, such a subsidiary company constitutes an
Further, under some Indian Tax Treaties, a foreign
independent legal entity.
enterprise may be considered to have a PE in India
due to the presence of its personnel in India, who
render services beyond a specified time period or to D. Issue of taxation as an
a related enterprise. For instance, under the India-US Association of Persons
tax treaty, a PE is said to be constituted where there is:
(l) the furnishing of services, other than included Depending on the manner in which it is structured,
services as defined in article 12 (royalties and fees for a contract research and manufacturing arrangement
included services), within a Contracting State by an could run the risk of being taxed under the ITA as
enterprise through employees or other personnel, a separately taxable unit called an association of
but only if: person (AOP). This is a significant issue for the
foreign enterprise which outsources these functions,
i. activities of that nature continue within that
given that, if such arrangement is treated as an AOP,
State for a period or periods aggregating to more
the profits of the foreign enterprise attributable to
than 90 days within any twelve-month period; or
such AOP, which otherwise would not have been
subjected to tax in India (in the absence of a PE of the
ii. the services are performed within that State for
foreign enterprise in India), would be taxable at the
a related enterprise (within the meaning of para-
maximum marginal rate of 40%.
graph 1 of article 9 (associated enterprises).
Although there is no definition of AOP under the ITA,

iii. Agency PE there have been a number of cases in which this issue
has been discussed. In the case of Commissioner of
Income Tax v. Indira Balkrishna61, the Supreme Court
Indian Tax Treaties typically contain a provision
has explained the concept of AOP as an association
whereby an Indian entity may be treated as a PE of
of persons must be one in which two or more persons
a foreign enterprise if the Indian entity, acting on
join in a common purpose or a common action, and
behalf of the foreign enterprise, has and habitually
as the words occur in a section which imposes a tax
exercises an authority to conclude contracts on behalf
on income, the association must be one the object of
of the foreign enterprise. Moreover, some Indian Tax
which is to produce income, profits or gains.
Treaties, such as the India-US tax treaty, also contain
an additional provision whereby an Indian entity may
Further, in the case of Deccan Wine and General
be regarded as a PE of the foreign enterprise, if the
Stores62, the Andhra Pradesh High Court further
Indian entity maintains a stock of goods from which it
examined this concept and observed that it is, there-
regularly delivers such goods on behalf of the foreign
fore, clear that an association of persons does not
enterprise and contributes to the sale of such goods. An
mean any and every combination of persons. It is
agent of independent nature is considered as an excep-
only when they associate themselves in an income-
tion to the Agency PE rule.
producing activity that they become an association
of persons. They must combine to engage in such
In cases of outsourcing by a foreign enterprise to its
an activity; the engagement must be pursuant to the
Indian subsidiary, a question arises as to whether
combined will of the persons constituting the asso-
there is added PE risk for the foreign enterprise as
ciation; there must be a meeting of the minds, so to
a result of the parent subsidiary relationship of the
speak. In a nutshell, there must be a common design
two entities. The answer to this lies in the Indian Tax
to produce income. If there is no common design,
Treaties itself. The principle which is embodied in
typical Indian Tax Treaties is that the existence of
61. [1960] 39 ITR 546 (SC)
a subsidiary company does not, by itself, constitute
62. ([1977] 106 ITR 111 (AP)

there is no association. Common interest is not F. Indian Transfer Pricing Issues

enough. Production of income is not enough.
Where entities are looking to outsource research and

Although there is lack of clarity in the Indian law
manufacturing functions to an associated enterprise,
on the concept of an AOP, broadly the essential
such as in cases of captive outsourcing, the fees
conditions for constituting an AOP may be said to be:
payable to the service provider should take into
Two or more persons account transfer pricing issues.
Voluntary Combinations In India, transfer pricing regulations (TP Regula-

tions) were introduced on April 1, 2001. The Indian
A common purpose or common action with Income Tax Act, 1961 lays down provisions that
object to produce profit or gains.
deal with the computation of income arising from
international transactions between associated
Combination in Joint Enterprise
enterprises. The basic rule enshrined in the TP Reg-
Some kind of scheme for common management. ulations is that any income arising from an interna-
tional transaction shall be computed having regard
E. Structuring Investment into to the arms length price (discussed below). The TP
Regulations define associated enterprise to include
India Use of Intermediate any enterprise that participates directly or indirectly
Jurisdictions or through one or more intermediaries in the man-
agement or control or capital of another enterprise.
Foreign entities that are looking at incorporating sub- Enterprises may also be regarded as associated as
sidiaries in India for outsourcing research and manu- a result of circumstances such as interdependence
facturing functions can achieve tax efficiency by use by virtue of borrowings, guarantees, licensing of
of a tax neutral intermediate jurisdiction which has trademarks, purchase, sales or where enterprises have
signed an Indian Tax Treaty (Treaty Jurisdiction) mutual interest as may be prescribed by the reve-
rather than directly investing into the Indian com- nue authorities. Here, enterprise is defined broadly
pany. The foreign entity can achieve tax efficiency and covers any entity (including a permanent estab-
by incorporating a company (or any other entity lishment) which is or proposes to be engaged in any
which is eligible to benefits of the relevant Indian Tax activity relating to the provision of goods / services
Treaty) in the Treaty Jurisdiction which would, in of any kind, investment activity, dealing in securities
turn, invest into the underlying Indian company. and extending loans. The term international trans-
action has been defined as a transaction between
The choice of an appropriate Treaty Jurisdiction, apart
two or more associated enterprises, either or both of
from tax neutrality and a good treaty network, would
which are non- residents. As mentioned earlier, the
depend on factors such as political stability, ease of
basic principle is that any income arising from such
administration, availability of reliable administrators,
an international transaction shall be computed hav-
favourable exchange controls and legal system, cer-
ing regard to the arms length price.
tainty in tax and legal framework and ease of winding
up operations. The Budget 2017 has introduced the concept of
secondary adjustment under the transfer pricing
Indian Tax Treaties aim to prevent double taxation
regulations.
of income and capital gains for a person or entity
resident in another jurisdiction.
i. Arms Length Price
Arms length price is the price which is applied or pro-

posed to be applied in a transaction between persons
31
other than associated enterprises, in uncontrolled tion, and to obtain and furnish to the revenue author-
conditions. The OECD Transfer Pricing Guidelines for ities an accountants report containing prescribed
Multinational Enterprises and Tax Administrations, details regarding the international transactions.
2010 (Guidelines) provide that the application of the Stringent penaltieshave been prescribed for non-com-
arms length principle is generally based on a compari- pliance with the procedural requirements and for
son of all the relevant conditions in a controlled trans- understatement of profits.
action with the conditions in an uncontrolled transac-
tion. Under the Guidelines, comparability is achieved
G. Disallowance of Deduction
when there are no differences in the conditions that
could materially affect the price or when reasonably
of Expenses Incurred in
accurate adjustments can be made to eliminate the Unethical Promotion
effects of any such differences. The analysis of the con-
trolled transactions with uncontrolled transactions is The Indian Medical Council (Professional Conduct,
the very basis of ascertaining whether the controlled Etiquette and Ethics) Regulations, 2002 prohibit the
transactions adhere to the arms length standard. medical practitioners and their professional associa-
tions from taking any Gift, Travel facility, Hospital-
The arms length price in relation to an international
ity, Cash or monetary grant from the medical device
transaction is to be determined by any of the
industry. The Central Board of Direct Taxes has issued
following methods depending on which is the most
instructions63 to the revenue department that the
appropriate given the business of the enterprises:
claim of any expense incurred in providing above
mentioned or similar freebees in violation of the pro-
Comparable uncontrolled price method; visions of Indian Medical Council (Professional Con-
duct, Etiquette and Ethics) Regulations, 2002 shall be
Resale price method;
inadmissible as expense because it is an expense pro-
Cost plus method; hibited by the law.
Profit split method;

II. Indirect Taxes
Transactional net margin method;
A challenge faced by Indian medical device

India has a well-developed tax structure with
companies with respect to transfer pricing is that
clearly demarcated authority between Central and
the TP Regulations do not specifically deal with
State Government and local bodies. The Indian
intangibles, or provide a basis of computing the
Central Government levies taxes on income
arms length price, while dealing with the same.
(except tax on agriculture income, which the State
As opposed to transactions involving tangibles,
Government can levy), custom duties, central
where a pricing situation in controlled transaction
excise and service tax. On the other hand, Value
can be compared with that of an uncontrolled
Added Tax (Sales tax in states where VAT is not
transaction (provided all other conditions are similar
yet in force), stamp duty, land revenue and tax on
or identical), in case of intangibles/intellectual
professions are levied by the State Government.
property it is very difficult to identify comparable
given the unique nature of the intellectual property Although the cost of labour and production in India
involved. Hence, it becomes difficult to find is significantly lower than other countries, the
a comparable based on which the arms length price ultimate price of the goods is on the higher side
may be ascertained. on account of a multi-layer and multi-stage levy of
indirect taxes. The reason for the significant increase
It is important to note that TP Regulations also
in the price of goods post taxation is more on
require persons entering into international transac-
tions to maintain prescribed documents and informa-
63. Circular No. 5/2012 [F. No. 225/142/2012-ITA.II], dated 1-8-2012.

account of the multi-layer and multi-stage indirect B. Customs Duty

taxation framework. It is for this reason that efforts
are being made to replace the existing indirect tax
Customs duties are levied whenever there is trafficking
system (which provides for a multi-layer and multi-
of goods through an Indian customs barrier i.e. levied
stage levy for goods and services) with a unified
both for the export and import of goods. Export duties
Goods and Services Tax (GST) system.
are competitively fixed so as to give advantage to the
exporters. Consequently a large share of customs
A. Service Tax revenue is contributed by import duty. Customs
duty primarily has a Basic Customs Duty for all
Service tax was introduced vide Chapter V to the goods imported into India and the rates of duty
Finance Act, 1994 and further widened in scope for classes of goods are mentioned in the Customs
by the subsequent Finance Acts. The Finance Act Tariff Act, 1975 (the Tariff Act), which is based on
2012 has brought about substantial changes in the the internationally accepted Harmonized System
provisions of Finance Act 1994 dealing with levy and of Nomenclature (HSN). The general rules of
collection of service tax. Section 66B of the Finance interpretation with respect to tariff are mentioned in
Act 1994 specifies the charge of service tax which is the Tariff Act. The rates are applied to the transaction
essentially that the service tax shall be levied on all value of goods (for transactions between unrelated
services provided or agreed to be provided in a taxable parties) as provided under the Customs Act, 1962
territory, other than services specified in the negative (the Customs Act) or by notification in the official
list or otherwise exempt under notification. Currently, gazette. A further duty, known as Additional Customs
service tax is levied at the rate of 15% on gross basis on Duty or the Countervailing Duty (CVD) is imposed
the specified taxable services. to countervail the appreciation of end price due to
the excise duty imposed on similar goods produced
Service tax from April 1, 2011 is payable on accrual
indigenously. To bring the price of the imported
basis instead of realization of value of taxable service.
goods to the level of locally produced goods which
Some of the taxable services are management
have already suffered a duty for manufacture in India
consulting services, consultancy or technical
(excise duty), the CVD is imposed at the same rate as
services by a consulting engineer, business auxiliary
excise duty on indigenous goods. In addition to the
services, intellectual property services, etc.
above, there are also Additional Duties in lieu of State
and local taxes (ACD) which are also imposed as a
Until July 10, 2014, services provided by way of tech-
countervailing duty against sales tax and value added
nical testing or analysis of newly developed drugs,
tax imposed by States. The ACD is currently levied at
including vaccines and herbal remedies, on human
the rate of 4 per cent.
participants by a clinical research organization
approved to conduct clinical trials by the Drug Con- Further, the Central Government, if satisfied that
troller General of India, were exempt from service circumstances exist which render it necessary to take
tax. However, this exemption is no longer availa- immediate action to provide for the protection of
ble. Export of services is not subject to service tax in the interests of any industry, from a sudden upsurge
India while in case of import of service, the recipient in the import of goods of a particular class or classes,
is liable to pay service tax. In order to qualify as an may provide for a Safeguard Duty. Safeguard Duty is
export under the Export of Service Rules 2005, inter levied on such goods as a temporary measure and the
alia the service must be rendered from India but intention for the same is protection of a particular
consumed outside India and the consideration must industry from the sudden rise in import. In the Indian
be paid in convertible foreign exchange. Additional medical industry, given that a large number of com-
conditions are imposed depending upon the type of panies are involved in the import and subsequent
service provided. resale of unpackaged medical device products, such
import is subject to a levy of a special duty termed as
Special Additional Duty (SAD).
33
An exemption has been provided to pre-packaged to avoid the cascading effect of taxes that was
goods where the sale price has been declared on the prevalent under the erstwhile sales tax regime.
package. The SAD paid is only available as a refund if it
is proved that state level VAT is paid on the subsequent
D. CENVAT
sales of the imported products. The issue often faced by
companies is that the process of obtaining refunds of
CENVAT is a duty of excise which is levied on all
SAD is tedious and time consuming and the time limit
goods that are produced or manufactured in India,
for filing the refund is stipulated as one year, which
marketable, movable and covered by the excise
often leads to a failure in obtaining rightful refunds.
legislation. The peak duty rate was reduced from 16 per
cent to 14 per cent by the Finance Act, 2008 and was
Under Section 9A of the Tariff Act, the Central
further reduced to 8 per cent, although there are other
Government can impose an Antidumping Duty on
rates ranging upwards, or based on an ad valorem/
imported articles, if it is exported to India at a value
quantity rate.
less than the normal value of that article in other
jurisdictions. Such duty is not to exceed the margin
of dumping with respect to that article. The law in E. Goods and Services Tax
India with respect to anti-dumping is based on the (GST)
Agreement on Anti-Dumping pursuant to Article VI
of the General Agreement on Tariffs and Trade, 1994.
The government is in the process of introducing the
GST, which will consolidate most indirect taxes.
C. Sales Tax and Value Added The constitutional amendment required for the
Tax introduction of GST has been ratified by the required
majority of the state legislatures and has also
received the assent of the President of India, thereby
Central Sales Tax (CST) is imposed on the sale of
making it a law. The government is currently deliber-
goods in the course of inter-state trade or commerce.
ating on the implementation aspects of the GST, and
Sales of goods are deemed to take place in the course
is hoping to roll it out by July 2017.
of inter-state trade if they result in the movement
of goods from one state to another, or if such sales
are effected by the transfer of documents of title to F. Research and Development
the goods during their movement from one state Cess
to another. No CST is levied on direct imports or
exports or the purchase or sale effected in the course
All payments made towards the import of technology
of imports or exports. The process of phasing out
are subject to a cess of 5% under the Research and
CST commenced with a reduction in the CST rate
Development Cess Act, 1986. Technology includes
from 4 per cent earlier to 2 percent on April 1, 2008.
any special or technical knowledge or any special
Value Added Tax (VAT) is levied on the sale of service required for any purpose whatsoever by an
goods within a particular state at the two main industrial concern under any foreign collaboration,
VAT rates of 4 per cent and 12.5 per cent. VAT is and includes designs, drawings, publications and
a state specific levy and most states in India have technical personnel.
introduced specific legislations for VAT based on the
Model VAT legislation circulated by the Empowered
Committee of State Finance Ministers. Further,
under the VAT regime, a system of tax credits on
input goods procured by the dealer is also available,

Conclusion
All medical devices, other than those mentioned in
The Indian medical device industry continues its Annexure D below, are completely outside the scope
upward march of growth and is strongly supported of price control. With respect to the singular event
by Indias robust legal framework. of price fixation of Coronary Stents, The government
had several interactions with the importers and
The Indian Government has identified the medical
manufacturers of Coronary Stent and took their
device industry as a focus industry for its flagship
feedback into account before fixing the price. Thus,
Make in India programme. Due to this, the govern-
it appears that the government sought to be restrained
ment is especially committed to easing the pro-
and transparent in its approach. Also, it is still possible
cesses and compliances for doing business of medi-
for importers and manufacturers of Coronary Stents
cal devices in India. This commitment was reflected
to increase their current margins by structuring their
in the governments decision to relax foreign direct
business model or by using the available relaxations as
investment restriction for companies engaged in
discussed in the body of this paper.
manufacturing of medical devices in 2015. In 2016
and 2017, the Indian Government hosted a three day Lastly, with the introduction of the Medical Device
medical device conference that saw participation of Rules, 2017, the medical device industry in India is
top government functionaries, regulators and indus- certain to receive a fillip.
try participants. There were several invite only events
Therefore, the medical devices industry in India
aptly titled CEOs roundtable where the leaders of
continues to offer unparalleled opportunities to
the industry enjoyed direct access to the relevant
present and potential stake holders, now more than
government functionaries and regulators and could
ever before.
share their concerns within closed doors. There is
also a proposal to launch new medical device parks
in which government will provide fiscal and mone-
tary incentives. This should give lot of confidence to
potential stakeholders to consider the Indian medical
device industry seriously.
Having said that, it is understandable that certain

decisions of the government such as the recent
notification to fix prices of coronary stents cannot
be said to be exactly industry friendly. However, as
discussed earlier in the paper, the price control was
triggered in case of coronary stents only because it
was found to be an essential device by an expert
committee.
35
Annexure A
List of Notified Medical Devices It is noteworthy that in addition to the above
medical devices, the following substances are also
1. Disposable Hypodermic Syringes regulated as Drugs under Drugs & Cosmetics Act,
1940 & Rules, 1945 there under:-
2. Disposable Hypodermic Needles
1. Blood Grouping Sera

3. Disposable Perfusion Sets
2. Skin Ligatures, Sutures and Staplers

4. In vitro Diagnostic Devices for HIV, HBsAg and
HCV
3. Intra-uterine devices (Cu-T)
5. Cardiac Stents
4. Condoms
6. Drug Eluting Stents

5. Tubal Rings
7. Catheters
6. Surgical Dressings
8. Intra Ocular Lenses

7. Umbilical Tapes
9. I.V. Cannulae
8. Blood/ Blood Component Bags
10. Bone Cements
11. Heart Valves.
12. Scalp Vein Set
13. Orthopedic Implants.
14. Internal Prosthetic replacements
15. Ablation Devices

Annexure B
Labeling Requirements for medical devices xiii. To overprint on the label of the device, the
words Physicians Sample--Not to be sold,
i. Proper name of the medical device; if a medical device is intended for distribution
to the medical professional as a free sample;
ii. The details necessary for the user to identify the
device and its use; xiv. To provide, except for imported devices, the
manufacturing licence number by preceding
iii. The name of the manufacturer and address of the
the words Manufacturing Licence Number or
manufacturing premises where the device has
Mfg. Lic. No. or M.L.;
been manufactured;
xv. In case of imported devices, the import licence
iv. The correct statement of the net quantity in
number, name and address of the importer and
terms of weight, measure, volume, number of
address of the actual manufacturing premises, date
units, as the case may be, and the number of
of manufacture, (if not already printed at the time
the devices contained in the package shall be
of import). The label may bear symbols recognised
expressed in metric system;
by the Bureau of Indian Standards or Interna-
tional Organisation for standardisation (ISO) may
v. Date of manufacture and date of expiry;
be used in lieu of text and the device safety is not
vi. Indication that the device contains medicinal compromised by a lack of understanding on the
or biological substances, where necessary; part of the user. Where the meaning of the symbol
is not obvious to the device user, for example, for a
vii. Batch number or lot number;
newly introduced symbol; an explanation shall be
provided in the instructions for use..
viii. Special storage and handling conditions, where
required;
ix. Indication if the product is a sterile product, its

sterile state and sterilization method;
x. Warnings or precautions where required;
xi. To label the device, if the device is intended for

single use;
xii. To overprint on the label of the container, the

words FOR CLINICAL INVESTIGATION ONLY,
if the device is intended for clinical investigation;
37
Annexure C
Labeling requirements for medical devices iv. name and address of the manufacturer and
intended for export address of actual premises where the device has
been manufactured
i. name of the Device;
v. manufacturing Licence No. preceded by the let-
ii. distinctive batch number or lot number ters M.L. No. or Manufacturing Licence No.;
preceded by the word Lot No. or Lot or Batch
vi. internationally recognised symbols in lieu of
No. or B. No.;
text, wherever required
iii. date of expiry, if any;

Annexure D
List of Notified Medical Devices 8. Intra Ocular Lenses
9. I.V. Cannulae
1. Disposable Hypodermic Syringes
10. Bone Cements

2. Disposable Hypodermic Needles
11. Heart Valves.

3. Disposable Perfusion Sets
12. Scalp Vein Set

4. In vitro Diagnostic Devices for HIV, HBsAg and
HCV
13. Orthopedic Implants.
5. Cardiac Stents
14. Internal Prosthetic replacements
6. Drug Eluting Stents

15. Ablation Devices
7. Catheters
39
Annexure E
mechanical barrier, for compression or for
First Schedule absorption of exudates only, for wounds which
have not breached the dermis and can heal by
primary intention;
[See rule 4]
b. Subject to clause (c), a non-invasive medical

Parameters for classification of medical devices
device which comes into contact with injured
and in vitro diagnostic medical devices
skin shall be assigned to Class B, if it is intended
to be used principally with wounds which have
Part I
breached the dermis, or is principally intended
for the management of the microenvironment
Parameters for classification of medical devices
of a wound;
other than in vitro diagnostic medical devices
c. a non-invasive medical device which comes
Basic Principles for classification. into contact with injured skin shall be assigned
to Class C, if it is intended to be used principally
i. Application of the classification provisions shall
with wounds which have breached the dermis
be governed by the intended purpose of the
and cannot heal by primary intention.
device.
ii. Non-invasive medical devices for channeling
ii. If the device is intended to be used in combina-
or storing substances.
tion with another device, the classification rules
shall apply separately to each of the devices. a. Subject to clauses (b) and (c), a non-invasive
Accessories are classified in their own right sepa- medical device shall be assigned to Class A, if
rately from the device with which they are used. it is intended for channeling or storing body
liquids or tissues or liquids or gases for the
iii. Software, which drives a device or influences the
purpose of eventual infusion, administration or
use of a device, falls automatically in the same
introduction into a human body;
class.
b. A non-invasive medical device referred to in
iv. If the device is not intended to be used solely or
clause (a) shall be assigned to Class B,
principally in a specific part of the body, it must be
if it is intended to be connected to an active
considered and classified on the basis of the most
medical device which is in Class B, C or D or
critical specified use.
for channeling blood or storing or channeling
other body liquids or storing organs, parts of
v. If several rules apply to the same device, based on
organs or body tissues:
the performance specified for the device by the
manufacturer, the strictest rules resulting in the
Provided, that the circumstances when
higher classification shall apply.
a non-invasive medical device is connected to
an active medical device include circumstances
1. Parameters for classification of medical devices.
where the safety and performance of the active
i. Non-invasive medical devices which come medical device is influenced by the non-invasive
into contact with injured skin. medical device, or vice versa; or
a. A non-invasive medical device which comes c. A non-invasive medical device referred to in

into contact with injured skin shall be assigned clause (a) shall be assigned to Class C,
to Class A, if it is intended to be used as a

if it is a blood bag that does not incorporate vi. Invasive (body orifice) medical devices for
a medicinal product. short term use.
iii. Non-invasive medical devices for modifying a. Subject to clause (b), an invasive (body orifice)
compositions of substances. medical device shall be assigned to Class B, if,-
a. Subject to clause (b), a non-invasive medical 1. it is intended for short term use; and
device shall be assigned to Class C, if it is
2. it is not intended to be connected to an active
intended for modifying the biological or the
medical device; or
chemical composition of blood or other body
liquids or other liquids intended for infusion
3. it is intended to be connected to a Class A
into the body.
medical device only.
b. A non-invasive medical device as referred to

b. An invasive (body orifice) medical device
in clause (a) shall be assigned to Class B, if
referred to in clause (a) shall be assigned to
the intended modification is carried out by
Class A, if,-
filtration, centrifuging or any exchange of gas
or of heat. 1. it is intended for use in an oral cavity as far as
the pharynx or in an ear canal up to the ear
iv. Other non-invasive medical devices.
drum or in a nasal cavity; and
A non-invasive medical device to which sub-

2. it is not liable to be absorbed by the mucous
paragraphs (i), (ii) and (iii) do not apply shall be
membrane.
assigned to
vii. Invasive (body orifice) medical devices for
Class A, if it does not come into contact with a
long term use.
person or comes into contact with intact skin
only. a. Subject to clause (b), an invasive (body orifice)
medical device shall be assigned to Class C, if it is
v. Invasive (body orifice) medical devices for
intended for long term use and, not intended to
transient use.
be connected to an active medical device or it is
to be connected to a Class A medical device only.
a. Subject to clause (b), an invasive (body orifice)
medical device shall be assigned to Class A, if,-
b. An invasive (body orifice) medical device
1. it is intended for transient use; and
Class B, if,-
2. it is not intended to be connected to an active
1. it is intended for use in an oral cavity as far as
medical device; or
the pharynx or in an ear canal up to the ear
3. it is intended to be connected to a Class A drum or in a nasal cavity; and
medical device only.
2. it is not liable to be absorbed by the mucous
b. An invasive (body orifice) medical device membrane.
viii. Invasive (body orifice) medical devices for
Class B, if,-
connection to active medical devices.
1. it is intended for use on the external surface of
An invasive (body orifice) medical device shall
an eyeball; or
be assigned to Class B, regardless of the duration
2. it is liable to be absorbed by the mucous of its use, if it is intended to be connected to an
membrane. active medical device which is in Class B, C or D.
41
ix. Surgically invasive medical devices for b. Subject to clause (c), a short term use surgically
transient use. invasive medical device shall be assigned to
Class C, if it is intended to undergo a chemical
a. Subject to clauses (b) to (g), a surgically
change in the body.
invasive medical device intended for transient
use shall be assigned to Class B. c. A short term use surgically invasive medical
device referred to in clause (b) shall be assigned
b. Subject to clauses (c) to (g), a transient use
to Class B, if it is intended to be placed into any
surgically invasive medical device shall be
tooth.
assigned to Class A, if it is a reusable surgical
instrument. d. A short term use surgically invasive medical
c. A transient use surgically invasive medical
intended for the administration of any
device shall be assigned to the same class as the
medicinal product or the supply of energy in
active medical device to which it is intended to
the form of ionising radiation.
be connected.
e. A short term use surgically invasive medical
d. A transient use surgically invasive medical
device shall be assigned to Class D, if it is
intended to have a biological effect or to be
intended for the supply of energy in the form of
wholly or mainly absorbed by the human
ionising radiation.
body or to be used specifically in direct contact
with the central nervous system or for the
e. A transient use surgically invasive medical
diagnosis, monitoring or correction of a defect
of the heart or of the central circulatory system
intended to have a biological effect or to be
through direct contact with these parts of the
wholly or mainly absorbed by the human body.
body.
f. A transient use surgically invasive medical
xi. mplantable medical devices and surgically
invasive medical devices for long term use.
intended for the administration of any
medicinal product by means of a delivery
a. Subject to clauses (b), (c) and (d), an
system and such administration is done in
implantable medical device or a surgically
a manner that is potentially hazardous.
invasive medical device intended for long term
use shall be assigned to Class C.
g. A transient use surgically invasive medical
b. A long term use medical device shall be
intended to be used specifically in direct
assigned to Class B, if it is intended to be placed
contact with the central nervous system or for
into any tooth.
the diagnosis, monitoring or correction of a
defect of the heart or of the central circulatory c. A long term use medical device shall be
system through direct contact with these parts assigned to Class D, if it is intended,-
of the body.
1. to be used in direct contact with the heart,
x. Surgically invasive medical devices for short the central circulatory system or the central
term use. nervous system;
a. Subject to clause (b), (d) and (e), a surgically 2. to be life supporting or life sustaining;
invasive medical device intended for short
3. to be an active medical device;
term use shall be assigned to Class B.

4. to be wholly or mainly absorbed by the b. An active diagnostic medical device referred to

human body; in sub-clause (1) of clause (a) shall be assigned
to Class A, if it is intended to be used solely to
5. for the administration of any medicinal
illuminate a patients body with light in the
product; or
visible or near infrared spectrum.
6. to be a breast implant.
c. An active diagnostic medical device referred to
in clause (a) shall be assigned to Class C, if it is
d. Subject to clause (b), a long term use medical
intended specifically for,-
intended to undergo chemical change in the
1. the monitoring of vital physiological
body.
parameters, where the nature of any variation
is such that it could result in immediate
xii. Active therapeutic medical devices for
danger to the patient (such as any variation in
administering or exchanging energy.
cardiac performance, respiration or activity of
a. Subject to clause (b), an active therapeutic the central nervous system); or
medical device shall be assigned to Class B, if it
2. diagnosing in a clinical situation where the
is intended for the administration or exchange
patient is in immediate danger.
of energy to or with a human body.
d. An active diagnostic medical device shall be

b. An active therapeutic medical device referred
assigned to Class C, if it is intended for the
to in (a) shall be assigned to Class C, if the
emission of ionising radiation and to be used in
administration or exchange of energy may be
diagnostic or interventional radiology.
done in a potentially hazardous way (such as
through the emission of ionizing radiation),
e. An active diagnostic medical device shall be
taking into account the nature, density and
assigned to Class C, if it is intended for the
site of application of the energy and the type of
control or monitoring, or to be used to directly
technology involved.
influence the performance, of any active
diagnostic medical device referred to in clause (d).
c. An active therapeutic medical device shall
be assigned to Class C, if it is intended for the
f. Subject to clause (g), an active medical device
control or monitoring, or to be used to directly
shall be assigned to Class B, if it is intended
influence the performance, of a Class C active
for the administration, or removal of, any
therapeutic device.
medicinal product, body liquid or other
substance to or from a human body.
xiii. Active diagnostic medical devices.
g. An active medical device referred to in

a. Subject to clauses (b) and (c), an active
clause (f) shall be assigned to Class C, if the
diagnostic medical device shall be assigned to
administration or removal of the medicinal
Class B, if it is intended,-
product, body liquid or other substance is
1. to be used to supply energy which will be done in a manner that is potentially hazardous,
absorbed by the human body; taking into account,
2. to be used to capture any image of the in 1. the nature of the medicinal product, body
vivo distribution of radiopharmaceuticals; or liquid or substance;
3. for the direct diagnosis or monitoring of vital 2. the part of the body concerned; and
physiological processes.
3. the mode and route of the administration or
removal.
43
xiv. Other active medical devices. xvii Medical devices for sterilization or
disinfection.
An active medical device to which provisions of
sub-paragraphs (xii) and (xiii) do not apply shall be a. Subject to clause (b), a medical device shall be
assigned to Class A. assigned to Class C, if it is intended to be used
specifically for,-
xv. Medical devices incorporating medicinal
products. 1. the sterilization of any other medical device;
a. Subject to clause (b), a medical device shall 2. the end-point disinfection of any other
be assigned to Class D, if it incorporates as an medical device; or
integral part a substance which,-
3. the disinfection, cleaning, rinsing or hydration
1. if used separately, may be considered to be of contact lenses.
a medicinal product; and
b. A medical device shall be assigned to Class B, if
2. is liable to act on a human body with an action it is intended for the disinfection of any other
ancillary to that of the medical device. medical device before the latter is sterilized or
undergoes end-point disinfection:
b. A medical device referred to in clause (a) shall
be assigned to Class B, if the incorporated Provided, that end-point disinfection means the
substance is a medicinal product exempted disinfection of a medical device immediately before its
from the licensing requirements of the Drugs use by or on a patient.
and Cosmetics Act, 1940 (23 of 1940) and the
xviii. Medical devices for contraceptive use.
rules made thereunder.
a. Subject to clause (b), a medical device intended

xvi. Medical devices incorporating animal or
to be used for contraception or the prevention
human cells, tissues or derivatives.
of the transmission of any sexually transmitted
a. Subject to clause (b), a medical device shall be disease shall be assigned to Class C.
assigned to Class D, if it is manufactured from
or incorporates,-
be assigned to Class D, if it is an implantable
1. cells, tissues or derivatives of cells or tissues, or medical device or an invasive medical device
any combination thereof, of animal or human intended for long term use.
origin, which are or have been rendered non-
viable; or Part II
2. cells, tissues or derivatives of cells or tissues, or

Parameters for classification for in vitro
any combination thereof,
diagnostic medical devices
of microbial or recombinant origin.
1. Basic principles for classification of in vitro

diagnostic medical devices:
be assigned to Class A, if it is manufactured
from or incorporates non-viable animal tissues,
a. Application of the classification provisions
or their derivatives, that come in contact with
shall be governed by the intended purpose of
intact skin only.
the devices.
b. If the device is intended to be used in

combination with another device, the
classification rules shall apply separately to

each of the devices. Accessories are classified 2. causes a life-threatening disease with
in their own right separately from the device a high risk of propagation.
with which they are used.
b. An in vitro diagnostic medical device shall be
c. Software, which drives a device or influences assigned to Class C, if it is intended for use in,-
the use of a device, falls automatically in the 1. detecting the presence of, or exposure to,
same class. a sexually transmitted agent;
d. Standalone software, which are not 2. detecting the presence in cerebrospinal fluid
incorporated into the medical device itself or blood of an infectious agent with a risk of
and provide an analysis based on the results limited propagation (for example, Cryptococcus
from the analyser, shall be classified in to the neoformans or Neisseria meningitidis);
same category that of the in vitro diagnostic
3. detecting the presence of an infectious agent,
medical device where it controls or influences
where there is a significant risk that an erro-
the intended output of a separate in vitro
neous result will cause death or severe disa-
diagnostic medical device.
bility to the individual or foetus being tested
e. Subject to the clause (c) and (d), software that (for example, a diagnostic assay for Chlamydia
is not incorporated in an in vitro diagnostic pneumoniae, Cytomegalovirus or Methicillin-re-
medical device, shall be classified using sistant Staphylococcus aureus);
the classification provisions as specified in
4. pre-natal screening of women in order to
paragraph 2.
determine their immune status towards
f. Calibrators intended to be used with a reagent transmissible agents such as immune status
should be treated in the same class as the in tests for Rubella or Toxoplasmosis;
vitro diagnostic medical device reagent.
5. determining infective disease status or
g. If several rules apply to the same device, based immune status, where there is a risk that an
on the performance specified for the device by erroneous result will lead to a patient man-
the manufacturer, the stringent rules resulting agement decision resulting in an imminent
in the higher classification shall apply. life-threatening situation for the patient being
tested (for example, Cytomegalovirus, Enter-
2. The parameters for classification of in vitro
ovirus or Herpes simplex virus in transplant
diagnostic medical devices as follows:-
patients);
i. In vitro diagnostic medical devices for

6. screening for disease stages, for the selection
detecting transmissible agents, etc.:
of patients for selective therapy and
management, or in the diagnosis of cancer;
a. An in vitro diagnostic medical device shall be
assigned to Class D, if it is intended to be used
ii. In vitro diagnostic medical devices for self-
for detecting the presence of, or exposure to, a
testing:
transmissible agent that,-
a. Subject to clause (b), an in vitro diagnostic
1. is in any blood, blood component, blood
medical device shall be assigned to Class C,
derivative, cell, tissue or organ, in order to
if it is intended to be used for self-testing.
assess the suitability of the blood, blood
component, blood derivative, cell, tissue or b. An in vitro diagnostic medical device referred to
organ, as the case may be, for transfusion in clause (a) shall be assigned to Class B, if it is
or transplantation; or intended to be used to obtain,-
.
45
1. test results that are not for the determination 1. human genetic testing, such as the testing for
of a medically-critical status; or cystic fibrosis or Huntingtons disease;
2. preliminary test results which require 2. monitoring levels of medicinal products,

confirmation by appropriate laboratory tests. substances or biological components, where
there is a risk that an erroneous result will lead
iii. In vitro diagnostic medical devices for near-
to a patient management decision resulting
patient testing:
in an immediate life-threatening situation for
the patient being tested (for example, cardiac
An in vitro diagnostic medical device shall be
markers, cyclosporin or prothrombin time
assigned to Class C, if it is to be used for near-
testing);
patient testing in a blood gas analysis or a blood
3. management of patients suffering from a
glucose determination.
life-threatening infectious disease such as
Illustration: Anticoagulant monitoring, diabetes viral load of Human immunodeficiency virus or
management, and testing for C-reactive protein Hepatitis C virus, or genotyping and sub-typing
and Helicobacter pylori. Hepatitis C virus or Human immunodeficiency
virus);or
iv. In vitro diagnostic medical devices used in in
vitro diagnostic procedures: 4. screening for congenital disorders in the
foetus such as Downs syndrome or spina
An in vitro diagnostic medical device shall be
bifida.
assigned to Class A:
vi. In vitro diagnostic medical devices for blood
1. if it is a reagent or an article which possesses
grouping or tissue typing:
any specific characteristic that is intended by
its product owner to make it suitable for an in a. Subject to clause (b), an in vitro diagnostic medi-
vitro diagnostic procedure related to a specific cal device shall be assigned to Class C,
examination; if it is intended to be used for blood grouping or
tissue typing to ensure the immunological com-
2. an instrument intended specifically to be used
patibility of any blood, blood component, blood
for an in vitro diagnostic procedure; or
derivative, cell, tissue or organ that is intended
for transfusion or transplantation, as the case
3. a specimen receptacle.
may be.
v. Other in vitro diagnostic medical devices:
b. An in vitro diagnostic medical device referred
a. An in vitro diagnostic medical device shall be to in clause (a) shall be assigned to Class D, if
assigned to Class B, if sub-paragraphs it is intended to be used for blood grouping or
(i) to (v) of paragraph 2 do not apply to it; or tissue typing according to the ABO system, the,
the Duffy system, the Kell system, the Kidd
b. It is a substance or device used for the
system, the rhesus system (for example, HLA,
assessment of the performance of an analytical
Anti-Duffy, Anti-Kidd).
procedure or a part thereof, without a
quantitative or qualitative assigned value.

About NDA
Nishith Desai Associates (NDA) is a research based international law firm with offices in Mumbai, Bangalore,
Palo Alto (Silicon Valley), Singapore, New Delhi, Munich and New York. We provide strategic legal, regulatory,
and tax advice coupled with industry expertise in an integrated manner.
As a firm of specialists, we work with select clients in select verticals on very complex and innovative
transactions and disputes.
Our forte includes innovation and strategic advice in futuristic areas of law such as those relating to Bitcoins
(block chain), Internet of Things (IOT), Autonomous Vehicles, Artificial Intelligence, Privatization of Outer
Space, Drones, Robotics, Virtual Reality, Med-Tech, Ed-Tech and Medical Devices and Nanotechnology.
We specialize in Globalization, International Tax, Fund Formation, Corporate & M&A, Private Equity &
Venture Capital, Intellectual Property, International Litigation and Dispute Resolution; Employment and
HR, Intellectual Property, International Commercial Law and Private Client. Our industry expertise spans
Automobile, Funds, Financial Services, IT and Telecom, Pharma and Healthcare, Media and Entertainment, Real
Estate, Infrastructure and Education. Our key clientele comprise marquee Fortune 500 corporations.
According to the recent report by India Brand Equity Foundation (IBEF), Indias Civil Aviation Industry is on a
high-growth trajectory expected to grow from being the 9th largest aviation market in the world with a size of
around US$ 16 billion to being the 3rd biggest by 2020 and the largest by 2030.
The Government of India (GOI) also envisions airport infrastructure investment of US$ 11.4 billion under
the Twelfth Five Year Plan (2012-17). It has opened up the airport sector to private participation. The Airports
Authority of India (AAI) also aims to bring around 250 airports under operation across the country by 2020.We
at NDA accordingly prepare ahead, envisaging the coming 10 to 15 years, in order to provide clients appropriate
insights based on our understanding of current as well as future legal and regulatory issues.
Our ability to innovate is endorsed through the numerous accolades gained over the years and we are also
commended by industry peers for our inventive excellence that inspires others.
Most recently, NDA was ranked the Most Innovative Asia Pacific Law Firm in 2016 by the Financial Times - RSG
Consulting Group in its prestigious FT Innovative Lawyers Asia-Pacific 2016 Awards. While this recognition
marks NDAs ingress as an innovator among the globes best law firms, NDA has previously won the award for
the Most Innovative Indian Law Firm for two consecutive years in 2014 and 2015.
As a research-centric firm, we strongly believe in constant knowledge expansion enabled through our dynamic
Knowledge Management (KM) and Continuing Education (CE) programs. Our constant output through
Webinars, Nishith.TV and Hotlines also serves as effective platforms for cross pollination of ideas and latest
trends.
Our trust-based, non-hierarchical, democratically managed organization that leverages research and knowledge
to deliver premium services, high value, and a unique employer proposition has been developed into a global
case study and published by John Wiley & Sons, USA in a feature titled Management by Trust in a Democratic
Enterprise: A Law Firm Shapes Organizational Behavior to Create Competitive Advantage in the September
2009 issue of Global Business and Organizational Excellence (GBOE).
47
A brief below chronicles our firms global acclaim for its achievements and prowess through the years.
IDEX Legal Awards: In 2015, NDA won the M&A Deal of the year, Best Dispute Management lawyer,
Best Use of Innovation and Technology in a law firm and Best Dispute Management Firm. Nishith Desai
was also recognized as the Managing Partner of the Year in 2014.
Merger Market: has recognized NDA as the fastest growing M&A law firm in India for the year 2015.
Legal 500 has ranked us in tier 1 for Investment Funds, Tax and Technology-Media-Telecom (TMT) practices
(2011, 2012, 2013, 2014)
International Financial Law Review (a Euromoney publication) in its IFLR1000 has placed Nishith Desai
Associates in Tier 1 for Private Equity (2014). For three consecutive years, IFLR recognized us as the Indian
Firm of the Year (2010-2013) for our Technology - Media - Telecom (TMT) practice.
Chambers and Partners has ranked us # 1 for Tax and Technology-Media-Telecom (2015 & 2014); #1 in
Employment Law (2015); # 1 in Tax, TMT and Private Equity (2013); and # 1 for Tax, TMT and Real Estate
FDI (2011).
India Business Law Journal (IBLJ) has awarded Nishith Desai Associates for Private Equity, Structured
Finance & Securitization, TMT, and Taxation in 2015 & 2014; for Employment Law in 2015
Legal Era recognized Nishith Desai Associates as the Best Tax Law Firm of the Year (2013).

Please see the last page of this paper for the most recent research papers by our experts.
Disclaimer
This report is a copyright of Nishith Desai Associates. No reader should act on the basis of any statement
contained herein without seeking professional advice. The authors and the firm expressly disclaim all and any
liability to any person who has read this report, or otherwise, in respect of anything, and of consequences of
anything done, or omitted to be done by any such person in reliance upon the contents of this report.
Contact
For any help or assistance please email us on [email protected] or
visit us at www.nishithdesai.com
49
The following research papers and much more are available on our Knowledge Site: www.nishithdesai.com
EdTech: E-Commerce in The Curious Case

From IT to AI India of the Indian
Gaming Laws
July 2016 September 2015

July 2015
Corporate Social Joint-Ventures in Preparing For

Responsibility & India a Driverless Future
Social Business
Models in India
March 2016 November 2014 June 2016
Internet of Things Doing Business in Private Equity

India and Private Debt
Investments in
India
April 2016 June 2016 June 2015
NDA Insights
TITLE TYPE DATE
ING Vysya - Kotak Bank : Rising M&As in Banking Sector M&A Lab January 2016
Cairn Vedanta : Fair or Socializing Vedantas Debt? M&A Lab January 2016
Reliance Pipavav : Anil Ambani scoops Pipavav Defence M&A Lab January 2016
Sun Pharma Ranbaxy: A Panacea for Ranbaxys ills? M&A Lab January 2015
Reliance Network18: Reliance tunes into Network18! M&A Lab January 2015
Thomas Cook Sterling Holiday: Lets Holiday Together! M&A Lab January 2015
Jet Etihad Jet Gets a Co-Pilot M&A Lab May 2014
Apollos Bumpy Ride in Pursuit of Cooper M&A Lab May 2014
Diageo-USL- King of Good Times; Hands over Crown Jewel to Diageo M&A Lab May 2014
Copyright Amendment Bill 2012 receives Indian Parliaments assent IP Lab September 2013
Public M&As in India: Takeover Code Dissected M&A Lab August 2013
File Foreign Application Prosecution History With Indian Patent
IP Lab April 2013
Office
Warburg - Future Capital - Deal Dissected M&A Lab January 2013
Real Financing - Onshore and Offshore Debt Funding Realty in India Realty Check May 2012
Pharma Patent Case Study IP Lab March 2012
Patni plays to iGates tunes M&A Lab January 2012
Vedanta Acquires Control Over Cairn India M&A Lab January 2012

Research@NDA
Research is the DNA of NDA. In early 1980s, our firm emerged from an extensive, and then pioneering,
research by Nishith M. Desai on the taxation of cross-border transactions. The research book written by him
provided the foundation for our international tax practice. Since then, we have relied upon research to be the
cornerstone of our practice development. Today, research is fully ingrained
in the firms culture.
Research has offered us the way to create thought leadership in various areas of law and public policy. Through
research, we discover new thinking, approaches, skills, reflections on jurisprudence,
and ultimately deliver superior value to our clients.
Over the years, we have produced some outstanding research papers, reports and articles. Almost on
a daily basis, we analyze and offer our perspective on latest legal developments through our Hotlines. These
Hotlines provide immediate awareness and quick reference, and have been eagerly received.
We also provide expanded commentary on issues through detailed articles for publication in newspapers and peri-
odicals for dissemination to wider audience. Our NDA Insights dissect and analyze a published, distinctive legal
transaction using multiple lenses and offer various perspectives, including some even overlooked by the execu-
tors of the transaction.
We regularly write extensive research papers and disseminate them through our website. Although we invest
heavily in terms of associates time and expenses in our research activities, we are happy
to provide unlimited access to our research to our clients and the community for greater good.
Our research has also contributed to public policy discourse, helped state and central governments
in drafting statutes, and provided regulators with a much needed comparative base for rule making.
Our ThinkTank discourses on Taxation of eCommerce, Arbitration, and Direct Tax Code have been widely
acknowledged.
As we continue to grow through our research-based approach, we are now in the second phase
of establishing a four-acre, state-of-the-art research center, just a 45-minute ferry ride from Mumbai
but in the middle of verdant hills of reclusive Alibaug-Raigadh district. The center will become the hub for
research activities involving our own associates as well as legal and tax researchers from world over.
It will also provide the platform to internationally renowned professionals to share their expertise
and experience with our associates and select clients.
We would love to hear from you about any suggestions you may have on our research reports.
Please feel free to contact us at

[email protected]
51
M U M BA I S I L I C O N VA L L E Y BA NG A LO RE
93 B, Mittal Court, Nariman Point 220 S California Ave., Suite 201 Prestige Loka, G01, 7/1 Brunton Rd
Mumbai 400 021, India Palo Alto, California 94306, USA Bangalore 560 025, India
tel +91 22 6669 5000 tel +1 650 325 7100 tel +91 80 6693 5000
fax +91 22 6669 5001 fax +1 650 325 7300 fax +91 80 6693 5001
S I NG A P O RE M U M BA I B KC N E W DE L HI
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Singapore 049 909 BandraKurla Complex New Delhi 110 024, India
Mumbai 400 051, India
tel +65 6550 9856 tel +91 11 4906 5000
tel +91 22 6159 5000 fax +91 11 4906 5001
fax +91 22 6159 5001
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80539 Munich, Germany New York, NY 10152
tel +49 89 203 006 268 tel +1 212 763 0080
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Copyright 2017 Nishith Desai Associates www.nishithdesai.com

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M U M BA I S I L I C O N VA L L E Y BA N G A LO RE S I N G A P O RE M U M BA I B KC NEW DELHI MUNICH N E W YO RK

The Indian Medical

Copyright 2017 Nishith Desai Associates www.nishithdesai.com

Nishith Desai Associates 2017

2. INDIA ENTRY STRATEGIES 04

3. INVESTMENT CLIMATE IN INDIA 05

4. INDIAS POST-TRIPS INTELLECTUAL PROPERTY ENVIRONMENT 06

5. LEGAL AND REGULATORY REGIME 07

Nishith Desai Associates 2017

The Indian consumer mindset and local business

1. Medical device industry: Realizing the Make in India opportu-

2 Nishith Desai Associates 2017

2. India Entry Strategies

Strategy Law Tax

To be aware of the legal framework is another

4 Nishith Desai Associates 2017

3. Investment Climate In India

Medical device means; ii. an accessory to such an instrument, apparatus,

b. diagnosis, monitoring, treatment,

4. Department of Industrial Policy and Promotion, Ministry of

4. Indias Post-Trips Intellectual Property

6 Nishith Desai Associates 2017

5. Legal And Regulatory Regime

The Act and Rules seek to:

Regulate the import, manufacture, distribution

Ensure the availability of standard quality Noti-

Drugs Controller General (I)

Head Quarter Zonal Offices Port/Airport Offices Laboratories

North Zone:Ghaziabad Banglore Ahmedabad CDL, Kolkata

South Zone: Chennai Chandigarh Chennai Port CDTL, Mumbai

East Zone: Kolkata Goa Chennai Airport CDTL, Chennai

West Zone: Mumbai Jammu Banglore RDTL, Guwahati

Hyderabad Zone Indore Hyderabad RDTL, Chandigarh

Ahmedabad Zone Goa CDL, Kasauli

kolkata *NIB, Noida

Kolkata Air Cargo *IPC, Ghaziabad

Mumbai Air Cargo

Staff Staff Staff Staff Staff

DDC(I) DDC(I) ADCI ADCI Director

ADCI ADCI DI DI Dy. Director

DI DI TDAs TDAs Sr. Scientific Officer I

TDAs TDAs Supporting Staff Supporting Staff Sr. Scientific officer II

Supporting Staff Supporting Staff Research Officer

Abbreviations: CDSCO- Central Drugs Standard Control Organ-

8 Nishith Desai Associates 2017

License to manufacture a Notified Form 29 Form 30 Rule 89 (Same as No time period

III. Manufacturing A Noti- be submitted to the office of the jurisdictional Joint

India have to be furnished

Under the Act, the activity of import of Notified Medical

India tion of Notified Medical Devices in India. Many a times,

In case of medical devices manufactured in USA,

10 Nishith Desai Associates 2017

As regards medical devices manufactured in Aus- VI. Clinical Trials

Of New Notified Medi- tific studies. In observational studies, the manufacturer

It is noteworthy that the Central Government has

VIII. Labeling Schedule M -III of the Rules prescribes a QMS

12 Nishith Desai Associates 2017

sale, distribution, stocking or exhibiting or offering

Mergers and Takeovers in the medical devices sector

The term Invention is defined under the Patents Act as