Whalesbook
THE SEAMLESS LINK
The current policy environment and the urgent need for greater self-sufficiency in medical technology underscore the significance of an RLI. India's aspiration to become a global leader in medical devices, as outlined in the National Medical Devices Policy 2023, hinges on strengthening its innovation ecosystem and overcoming systemic hurdles. While India possesses deep clinical talent and mature digital infrastructure, a persistent reliance on imported high-end equipment highlights a critical bottleneck in indigenous design and research.
The Import Dependency Dilemma
India's medical device market is characterized by substantial import dependence, with foreign sources meeting approximately 70-80% of demand for sophisticated equipment, including MRI scanners and robotic surgery systems. This reliance translates into significant financial outlays and vulnerabilities in supply chains, as evidenced during global disruptions. The domestic industry currently fulfills less than a third of the nation's requirements, and innovators face chronic challenges in accessing risk capital, robust testing infrastructure, and streamlined pathways from laboratory to market. The market, valued around $16.97 billion in 2025, is projected to reach $26.66 billion by 2031, indicating substantial growth potential that is currently hampered by this import dependency.
Bridging the R&D Gap: The RLI Proposition
The proposed Research-Linked Incentive (RLI) directly targets this upstream innovation deficit. Unlike Production-Linked Incentives (PLI) that reward output after an idea has matured, an RLI is designed to back the invention process itself. It aims to de-risk the critical phases of prototype development, validation, approval, and clinical use. This policy aims to fill the pipeline with devices conceived and developed in India, directly fostering 'Innovate in India'.
Policy Framework and Ecosystem Needs
The RLI initiative aligns with the broader National Medical Devices Policy 2023 and the National Policy on R&D and Innovation in the Pharma-MedTech Sector. These policies emphasize creating an innovation-conducive regulatory environment, providing fiscal and non-fiscal incentives, and building a strengthened ecosystem through public-private-academic partnerships. For an RLI to be effective, it must be tiered and aligned with Technology Readiness Levels (TRLs), with incentives escalating as research progresses from early exploration (TRL 1-3) through prototyping (TRL 3-5) and clinical validation (TRL 5-7). The policy must precisely define 'research' activities within MedTech, encompassing engineering, clinical science, design, and regulatory aspects. Furthermore, a comprehensive ecosystem is essential, including clinical validation centers, Good Laboratory Practice (GLP) testing facilities, 'living labs' in hospitals, regulatory advisory services, specialized manpower development, and IP commercialization pathways. The National Digital Health Mission (NDHM) and other digital initiatives can provide an integrated platform for data management and collaboration.
Navigating the Landscape: Incentives and Outlook
The RLI should integrate seamlessly with existing national programs such as the PRIP scheme, National Digital Health Mission, and Startup India, avoiding duplication and leveraging shared infrastructure. A phased rollout, beginning with high-potential segments like AI-enabled diagnostics and minimally invasive tools, is advised to allow for piloting and capacity building. Beyond direct funding, clever fiscal levers are crucial. These include reinstating weighted R&D deductions for MedTech, introducing a patent-box regime on royalty income, and enabling revenue-based incentives for locally filed intellectual property. The intent is to make innovating in India demonstrably attractive. By rewarding evidence-based plans, clinical value, and safety, such a framework can attract Global Capability Centers (GCCs) to conduct India-first research and retain IP domestically. This strategic shift aims to move India from being primarily a producer of low-end consumables to a manufacturer of high-end, globally competitive medical devices, thereby enhancing national security, economic resilience, and clinical equity.