India eases foreign ownership rules for medical device makers

NEW DELHI (Reuters) - India has made it easier for foreigners to fully own existing medical device makers in the country, in a bid to boost investment in the $7 billion sector.

The government said on Wednesday foreigners wanting to buy 100 percent of device makers no longer need to get prior approval.

India has already allowed full foreign ownership of new companies, but the requirement for prior approval for purchases of existing firms has kept down investment in manufacturing.

In a statement, the government said it was easing "norms" for the medical devices industry to encourage inflows of foreign direct investment, adding that the domestic capital market "is not able to provide much needed investment in the sector."

India currently imports about 70 percent of its medical devices requirement from overseas, HDFC Securities estimates.

Shares of device makers jumped on Wednesday after the government's decision. Shares in Opto Circuits (India) Ltd surged almost 16 percent, while Siemens India gained 2.2 percent.

Rahul Guha, partner and director at Boston Consulting Group welcomed the move but said the government needs to do more to boost the medical devices industry.

"This needs to be followed up with clarity on price regulation as well as manufacturing incentives before foreign players consider India," Guha said.

(Reporting by Aditya Kalra; Additional reporting by Abhishek Vishnoi; Editing by Richard Borsuk)