Why Indian Medical Device Startups Are Fleeing to Vietnam and Malaysia in 2025
Why Indian Medical Device Startups Are Fleeing to Vietnam and Malaysia in 2025
“We had the innovation, the funds, and the will — but not the time to wait for red tape to clear.” These were the parting words of a young Indian entrepreneur who recently moved his medical device startup’s operations to Vietnam. His voice isn't alone. It's part of a growing chorus of Indian medtech founders who are walking away — not because they want to, but because the system leaves them little choice.
In 2025, a silent but serious shift is happening in India's health-tech landscape: promising medical device companies are leaving the country. Despite the government's push for Atmanirbhar Bharat, ground realities tell a different story — one where ambition is often choked by bureaucracy, uncertainty, and sluggish regulation.
The Startup That Gave Up on India
Take the example of a Pune-based startup that recently relocated to Malaysia. After securing seed funding, the team was eager to begin manufacturing a low-cost, portable ventilator. Their excitement was short-lived. For nearly eight months, they were stuck navigating a maze of unclear compliance requirements, waiting on approvals from overlapping regulatory bodies, and facing inconsistent policy interpretations. Every delay meant burning cash — without producing a single unit.
In contrast, when they moved to Malaysia, things moved swiftly. Regulatory procedures were transparent, the application process was digital and time-bound, and incentives were offered to high-tech medical manufacturers. Within three months, their prototype was being tested and scaled.
This is not an isolated incident.
What the Parliamentary Report Reveals
A Parliamentary Standing Committee on Health and Family Welfare recently raised red flags on the issue. Their report confirmed that many Indian medical device manufacturers are relocating to Vietnam and Malaysia due to:
- Delayed and unpredictable licensing in India
- Opaque regulatory processes and lack of clear communication
- Cost of doing business rising due to lack of domestic component supply
- Frequent policy changes causing investor hesitation
"India imports over 70% of its medical devices. We have the talent and vision to change that — but we are pushing them away," notes the Committee.
Why Vietnam and Malaysia Are Winning
These Southeast Asian nations aren’t just lucky beneficiaries — they’re actively wooing global health-tech innovators. Here's how they’re outpacing India:
- ? Faster Time to Market: Clear timelines and simplified approval processes mean companies can launch products quicker.
- ? Lower Costs: Competitive labor rates and better manufacturing infrastructure reduce overheads.
- ? Predictable Policies: Entrepreneurs aren't left guessing — regulations are consistent and transparent.
- ? Government Support: Both Vietnam and Malaysia offer tax holidays, grants, and help with international certifications like CE and FDA approvals.
In comparison, Indian startups often struggle with compliance ambiguity. A device that qualifies as a Class A product today could be reclassified tomorrow, forcing a complete redo of paperwork, testing, and submission — costing time, money, and investor confidence.
The Missed Opportunity
India is home to over 80,000 startups and has one of the largest talent pools in engineering, life sciences, and AI. With a population of 1.4 billion and growing demand for healthcare infrastructure, the opportunity is massive. Yet, instead of becoming a global manufacturing hub, India risks becoming just another consumer market — importing devices it could have easily made.
Unless this trend is reversed, India may soon be purchasing ventilators, diagnostic kits, and implants developed by Indian founders but made in Vietnam.
What Needs to Change — Urgently
To retain its innovators, India must:
- Create a single-window clearance system for medtech approvals.
- Digitize and standardize licensing procedures to ensure transparency.
- Invest in supply chain development to reduce dependency on imports.
- Offer real incentives — not just press releases — to early-stage medtech startups.
- Ensure coordination among CDSCO, BIS, and other regulatory bodies to avoid conflicting requirements.
Final Thoughts
The stakes are high. These are not just economic opportunities slipping away — these are life-saving technologies, jobs for skilled youth, and India’s chance to lead in a sunrise sector.
It's time to move from slogans to action. If India truly wants to be the world’s pharmacy and medical tech hub, it must build an environment where startups choose to stay, not feel forced to leave.
The question is — will the system listen before it's too late?
Sources & References:
- Parliamentary Standing Committee on Health and Family Welfare, 2024-2025
- First-hand startup account (anonymized for privacy)
Industry reports from FICCI & MedTech Forum India