Budget 2026: Research-linked incentives can turn ‘Make in India’ into ‘Innovate in India’

India’s medical devices market is expanding; our digital rails are mature, and clinical talent runs deep. Yet we still import most sophisticated equipment—from MRI scanners to robotic surgery systems—because design-led R&D remains thin at home. The domestic industry fulfils less than a third of demand, and innovators face chronic barriers to risk capital, testing infrastructure, and smooth lab-to-market pathways.

That is the gap a research-linked Incentive (RLI) can close. Unlike production-linked schemes that reward output after the idea has matured, an RLI backs invention itself—de-risking the path from prototype to validation, approval, and use. It complements manufacturing policies by filling the upstream pipeline with India-origin devices and data. If PLI helped “Make in India,” a well-designed RLI can decisively unlock “Innovate in India”.

The policy backdrop is promising. The National Medical Devices Policy (2023) and the National Policy on R&D and Innovation in the Pharma-MedTech Sector outline three pillars: an innovation-conducive regulatory environment, fiscal and non-fiscal incentives to attract investment, and a strengthened ecosystem built on public-private-academic partnerships. PRIP combines new Centres of Excellence with direct R&D funding to industry and MSMEs. Yet medtech—capital-intensive and complexity-driven—still lacks a sector-specific, risk-tolerant mechanism for frontier areas such as AI imaging, smart implants, precision diagnostics, and surgical robotics. An RLI tailored to medtech fills that missing rung.

What should India’s medtech RLI look like

First, it must be tiered and aligned with technology readiness levels (TRLs). Research is not a single gate; it is a ladder. Early exploration (TRL 1–3) needs grants and tax support. Design and prototyping (TRL 3–5) require simulation, bench testing, and rapid iteration to ensure optimal performance. Pre-clinical and clinical validation (TRL 5–7) demand biological testing, IRB approvals, pilot trials, and robust data systems. Product validation and regulatory documentation (TRL 6–9) call for safety, quality systems, and filings with CDSCO—and often US FDA or EU MDR. Incentives should rise with risk and evidence at each level.

Second, define “research” precisely for devices. Medtech blends engineering, clinical science, design controls, human factors, and regulatory science. Clarity on eligible activities prevents misuse, enables outcome-linked monitoring, and aligns with global benchmarks, such as those established by BARDA (US) and EDB (Singapore).

Third, focus on the whole ecosystem. The RLI should not only fund projects but also prepare the ground, including clinical validation centres, GLP testing, living labs in hospitals, regulatory advisory services, specialist manpower, and IP commercialisation pathways. Today’s missing links are known parks that offer real estate but not structured, programmatic support; IP help with filing but little with monetisation; and skilling that is too generic for medtech R&D.

Fourth, dovetail with national initiatives. An effective RLI maps cleanly onto PRIP, the National Digital Health Mission, Startup India, BIRAC, and ANRF, so money is amplified—not duplicated—and infrastructure is shared. This calls for a single window that recognises prior grants, accelerates ethics approvals, and coordinates testing slots across government and accredited private labs.

Finally, rollout should be phased. Begin where India can move fastest—diagnostics, AI-enabled devices, and surgical tools—pilot with tight milestones and reviews, then scale as rules and capacities mature. Clear communication will attract GCCs to place India-first research here, with pathways to retain and monetise IP domestically.

These choices are not theoretical. India’s own playbooks—semiconductor DLI, Auto-PLI, and BIRAC grant ladders—show that tiered, TRL-aware support moves ideas into industry by targeting bottlenecks and rewarding evidence, not promises. A medtech-specific RLI should adapt that DNA while respecting clinical and regulatory complexity.

Why the urgency? Because the opportunity cost of delay is steep. Every imported high-end device signals a pipeline that broke between the idea and the ICU. Every startup that relocates testing abroad does so because clusters are thin and validation pathways are slow. Every hospital that cannot trial an Indian implant loses a chance to build evidence and lower patient bills. The root cause is fragmentation and the absence of a unified framework that aligns innovation with regulation, skilling, and IP monetisation.

India’s comparative advantages are real: diverse cohorts, digitising care, and an energetic founder-clinician community. Our market can validate at scale, and our engineering depth integrates AI, sensors, materials, and mechatronics. When policy rewards the right work at the right time, those strengths compound.

Consider what a functioning RLI will change on the ground

For startups and MSMEs, it creates predictable, milestone-based capital and access to shared testbeds with clear IP rules. Hospitals and clinicians gain funding for translational research roles, enabling pilot trials that generate regulator-grade evidence and reduce patient costs. Universities are shifting from papers to prototypes, with incentives for spin-offs, joint ownership, and embedded curricula in design controls and regulatory science. For GCCs and larger industries, the RLI offers premium rewards for India-first mandates, a patent-box-style benefit on royalty income, and fast-track regulatory consultations—making it rational to place serious device R&D in India and retain the IP there.

Sceptics will ask: why not double down on PLI and keep importing what we cannot make? Because manufacturing without invention leaves us exposed—economically, strategically, and clinically. Supply chains can shift; IP rents accumulate elsewhere; and product choices reflect the needs of other systems, not ours. Production incentives are necessary but insufficient. Without an RLI, we optimise the tail of the value chain and starve the head.

What should the government do next?

Move swiftly to notify the RLI architecture and eligibility, define TRL-linked activities, co-investment norms, and transparent scoring that prizes clinical value, safety, and evidence-based plans. Stand up a lean programme office that integrates PRIP, ANRF, BIRAC, CDSCO, and medtech parks, runs time-bound calls, publishes awards and outcomes, and guarantees validation slots with predictable turnaround times. Begin with a one-year pilot across three segments—AI-enabled diagnostics, minimally invasive tools, and implantable—tying disbursements to independent technical reviews, clinical milestones, and regulatory submissions. This approach links R&D to public procurement, ensuring that devices with verifiable research from India and local clinical data receive priority access. Finally, adopt clever fiscal levers—reinstate weighted R&D deductions for medtech, introduce a patent-box regime for qualifying royalty income, and enable revenue-based incentives for licensed, India-filed IP—so that innovating in India becomes undeniably attractive.

This is not only about economics. It is about equity and dignity in care. When an Indian stroke centre uses a home-grown imaging solution tailored to our workflows and costs, more patients get timely treatment. When a rural cath lab operates on devices validated in Indian conditions, complications fall, and confidence rises. When an affordable implant built here lasts longer because testing reflected our realities, out-of-pocket burdens drop. Innovation that begins in India serves India first—and then the world.

We often speak of “self-reliance” in terms of factories and tariffs. Genuine self-reliance in medtech is the confidence to run the full distance from question to cure. It starts with a research problem framed in an Indian clinic, passes through Indian prototypes tested in Indian bodies under Indian protocols, and ends with a device any Indian hospital can adopt with pride. The RLI is the instrument that makes that journey normal rather than rare.

India can be the world’s most vibrant proving ground for life-saving devices. We have the patients, the talent, the data, and the moral purpose. What we need now is a framework that rewards courage early, values evidence at every step, and keeps value—ideas, IP, and impact—at home. Let us build it. And then let us build with it.

(Parmar, an MP from Gujarat, is a member of the Indian Medical Parliamentarians' Forum (IMPF); Bhanu is Executive Director at the Centre for Legislative Research and Advocacy, Views are personal)