Govt mulls FDI policy relaxation in medical devices sector

The government is looking at relaxing FDI policy for the cash-starved medical devices sector to attract more investments and boost domestic manufacturing.
Inter-ministerial consultations are on to liberalise the foreign direct investment policy for the sector "which badly needs foreign investment", sources said.
Besides the Commerce and Industry Ministry, the Finance Ministry, the Health and Family Welfare Ministry and the Department of Pharmaceuticals are involved in the consultations.
FDI in the sector is permitted through the government- approval route and the industry has been demanding that it be put under the automatic route, they said.
"India badly needs FDI in medical devices and equipment sector. The industry is not modern and there is no threat of mergers and acquisitions from multi-national firms as domestic companies are not big unlike drug firms. So it should not be subjected to FDI limits and other restrictions," said a source.

Industry officials have maintained for long that in the current "restrictive regime" no foreign investors would invest in the sector and to make the segment modern and self- dependent, the government should relax the FDI policy.

The sector currently falls under the pharmaceutical category and is accordingly subjected to FDI limits and other conditions, such as the mandatory government approvals.
India allows 100 per cent FDI in the pharma sector. While FDI is permitted through automatic route in case of greenfield investment or new venture, Foreign Investment Promotion Board (FIPB) approval is required in case of brownfield or existing companies. Besides, there are many other riders.

As per estimates, India imports about 70 per cent of its requirement of medical devices. The industry size is about USD 7 billion in the country.
Medical devices include wide range of products such as sutures, implants and surgical instruments.
After a spate of mergers mergers and acquisition of big domestic pharma companies by multi-national firms, government tightened the FDI policy for the sector.