FDI in Medical Device in India

RBI formalizes automatic 100% FDI in medical devices sector

he government on Wednesday allowed 100 per cent FDI under automatic route in medical devices sector to encourage manufacturing of equipments, including diagnostic kits and other devices.

“Easing of norms for medical devices industry by creating special carve out in the extant FDI policy on pharma sector will encourage FDI inflows in this area,” said an official statement issued after the Union Cabinet meeting here.

The 100 per cent FDI, it added, will be permitted under the automatic route, meaning a foreign investor will not have to seek the permission of Foreign Investment Promotion Board (FIPB) to acquire an existing company or set up a new manufacturing unit in the medical devices sector.

The condition of ‘non-compete clause’ would also not be applicable to greenfield (new project) as well as brownfield projects (existing units) of this industry.

Earlier FDI up to 100 per cent was permitted, subject to certain conditions.

While FDI in new projects is under automatic route, brownfield projects are placed under the government approval route.

The policy on pharmaceutical sector covers medical devices since this area is not separately covered.

Now, the Union Cabinet has given its approval to amend the existing policy to carve out medical devices segment.

“So far both in greenfield and brownfield projects, 100 per cent FDI is allowed. Within the same category, a distinct new sub-category has been carved out with regard to medical devices,” finance minister Arun Jaitley said.

 Medical devices include any instrument, apparatus, appliance, implant, material or other article, whether used alone or in combination, including the software intended by its manufacturer to be used specially for human beings or animals for one or more of the specific purposes.

It also includes a device which is a reagent, calibrator, control material, kit, equipment or system whether used alone or in combination thereof intended to be used for examination and providing information for medical or diagnostic purposes.

 India has achieved an eminent global position in pharma sector. However, the same has not been replicated in the medical devices industry, it added.

“In this age of super specialisation, if medicines and pharma are one aspect, in which India has attained a certain amount of core competence, we still haven’t achieved that in medical devices, particularly which are to be installed in human body for the purpose of treatment,” Jaitley said.

 “The country has a huge pool of scientists and engineers who have potential to take medical device industry to a very high level. Domestic capital market is not able to provide much needed investment in the sector,” it said.