(Reuters) — India plans to set up a regulator to oversee the country’s $4 billion medical device industry, according to a draft policy released this month, the country’s first effort to regulate an industry that covers everything from thermometers to prostheses.

The policy document, welcomed by many in the industry despite concerns over a lack of detail, also outlines plans to boost local manufacturing and reduce reliance on imports.

While India is the world’s third-largest pharmaceutical market, its share of the medical devices market is way behind. More than 70 percent of medical equipment sold in the country is imported, mostly from the United States.

Most Indian medical device makers are small and medium-cap firms, making basic, often disposable, equipment. It falls to multinationals like Johnson & Johnson (NYSE:JNJ), Royal Philips (NYSE:PHG) and Becton Dickinson & Co. (NYSE:BDX) to provide high-end devices.

J&J and Becton Dickinson already have manufacturing plants in the country, while Philips, General Electric (NYSE:GE) and Siemens (NYSE:SI) are ramping-up their India operations.

Still, the country is years away from making any meaningful reduction in the percentage of its medical device imports, because newer technologies continue to be launched overseas.

Analysts believe the Indian medical devices market could touch $50 billion by 2025, driven by a burgeoning middle class in need of more and better hospitals and clinics, which would require more medical devices.

The government has taken some steps this year to realize that potential.

In January, it allowed 100 percent foreign direct investment into the sector. The government also plans to set up medical device industrial parks in the states of Gujarat and Tamil Nadu.

The draft policy issued by the central Department of Pharmaceuticals proposes an autonomous National Medical Device Authority tasked with promoting the local industry and ensuring adherence to safety standards. (bit.ly/1FKhClQ)

It also proposes price controls for devices including surgical instruments, implants and diagnostic equipment — a step that raised some eyebrows among manufacturers, as the country’s pharmaceutical industry is already in a legal wrangle with the government over price caps on drugs.

Many industry groups welcomed the overall policy, however, though local makers pressed the government to do more to discourage imports.

“It’s like we are importing Audis and Mercedes for our big hospitals, when the consumer needs Maruti Suzukis and Tata Nanos as well,” said Rajiv Nath of the Association of Indian Medical Device Industry (AIMED), which represents most local firms.

Stakeholders in the industry have six weeks to respond to the draft policy before final regulations are issued.

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