Commerce ministry proposes relaxation of FDI rules for medical devices manufacturing

The government is looking at relaxing foreign direct investment (FDI) in the manufacture of medical devices, in order to attract investments and boost domestic manufacturing, in line with its `Make in India' policy.

Commerce and industry ministry has now circulated a draft cabinet note on liberalising foreign direct investment (FDI) in medical devices. The draft is being circulated among concerned ministries before moving the proposal before the cabinet.

"After the ministry receives comments from all the concerned departments and ministries, the DIPP (Department of Industrial Policy and Promotion) would prepare the final note for consideration of the cabinet," officials said.

FDI in medical devices is permitted through the government-approval route and the industry has been demanding that it be brought under the automatic route.

Prime Minister Narendra Modi too had recently made a pitch for manufacture of advanced medical equipment in India and for easing FDI rules for such manufacturing.

Speaking at the inauguration of the recently refurbished Sir Harkisondas Nurrotamdas Reliance Foundation Hospital in South Mumbai last month, Modi had said investment in manufacture of medical equipment would benefit the average Indian patient.

The medical devices sector falls under the pharmaceutical category and is accordingly subjected to FDI limits and other conditions, such as the mandatory government approvals.

Government allows 100 per cent FDI in pharma sector.

While FDI is permitted through automatic route in the case of greenfield investment or new venture, approval of the Foreign Investment Promotion Board (FIPB) is required in the case of brownfield or existing companies. Besides, there are several other riders also.

The commerce and industry ministry is reported to be seeking to put the sector under automatic approval route.

"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," sources added.

India imports about 70 per cent of its requirement of medical devices, which include wide range of products such as sutures, implants and surgical instruments. The domestic industry size is about $7 billion.