Healthcare could more expensive for you as West Asia tension trigger supply fear

India’s medical devices industry is facing a sharp rise in input costs as tensions in West Asia and disruptions around the Strait of Hormuz begin to filter into supply chains, raising concerns over potential increases in hospital procurement costs if disruptions persist.

Industry estimates show that prices of critical plastics have risen by nearly 50%, while packaging costs and diesel-based power expenses have increased by over 20%. At the same time, prices of piped natural gas used for manufacturing processes have nearly doubled amid supply constraints, significantly raising operating costs for manufacturers.

The impact is being felt most acutely in a segment characterised by thin margins and high volumes, where even modest cost increases can affect viability. Manufacturers say the current situation has already forced price revisions of 10–20% across several products to sustain operations.

India’s medical devices market is estimated at around $11–12 billion and continues to see strong growth driven by rising healthcare demand. However, the sector remains heavily import-dependent, with a large share of medical devices and critical inputs sourced from overseas, exposing manufacturers to global supply disruptions.

“There is currently no shortage of syringes or other medical disposables, and there is no cause for public concern. However, we are seeing substantial price increases, longer lead times and elevated freight costs,” said Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD).

India remains heavily dependent on imports for specialised medical-grade polymers that meet regulatory standards. Any sustained disruption in global supply chains, particularly through critical shipping routes such as the Strait of Hormuz, could affect production continuity and export commitments to markets such as the US and Europe, the industry said.

Manufacturers have so far managed shipment delays of one to three weeks through buffer stocks, but industry bodies warn that extended disruptions could expose the sector to opportunistic pricing by dominant global raw material suppliers.

The cost pressures come at a time when the sector is already grappling with structural issues such as an inverted duty structure. Manufacturers pay 18% GST on inputs but are able to charge only 5% on finished devices, leading to accumulation of input tax credits and working capital stress.

Any sustained increase in input costs could eventually reflect in higher prices for essential hospital consumables, particularly in high-volume categories such as syringes, gloves and catheters.

Industry bodies have sought urgent government intervention to ease liquidity pressures and stabilise operations. Key demands include faster GST refunds, rationalisation of inland freight charges, and temporary duty relief on raw material and component imports.

The Association of Indian Medical Device Industry has proposed a three-month customs duty rebate of 2.5% on raw material imports and 5% on components to offset the current cost escalation.

At the same time, the industry has urged the government not to reduce import duties on finished medical devices, warning that such a move could disadvantage domestic manufacturers already under stress and lead to a surge in low-cost imports.

With over 5 lakh jobs linked to the sector and exports to developed markets at stake, manufacturers say timely intervention will be critical to prevent cost pressures from translating into supply disruptions and higher healthcare costs.