Cabinet approves 100% FDI in medical devices sector via automatic route

The Cabinet has given approval to 100 per cent foreign direct investment in the cash-starved medical devices sector under the automatic route, according to an official statement.

Currently, the medical devices sector comes under the pharmaceutical category and is accordingly subject to FDI limits and other conditions such as mandatory government approvals.

In the pharma sector, 100 per cent FDI is permitted through the automatic route in the case of greenfield investment or new venture and the Foreign Investment Promotion Board (FIPB) approval is required in the case of brownfield investment or in existing companies.

However, following the Cabinet approval, 100 per cent FDI will be allowed in medical devices sector for both greenfield and brownfield projects through a automatic route.

"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," as per the official statement issued after the Cabinet meeting.

This is expected to help attract more investments and boost domestic manufacturing of devices. India, the 

third-largest Asian economy, currently imports more than 70 per cent of medical devices.

Medical devices include a wide range of products such as 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.

While the big equipment market is dominated by global giants Philips, GE and Siemens, a clutch of domestic players has emerged many of whom have attracted PE/VC investors.

(Edited by Joby Puthuparampil Johnson)

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