Govt floats draft note on relaxing FDI in medical devices

The Commerce and Industry Ministry has circulated a draft Cabinet note for inter-ministerial comments on liberalising foreign direct investment (FDI) policy in medical devices.

The government is looking at relaxing the policy for the cash-starved medical devices sector to attract more investments and boost domestic manufacturing, sources said.

"After the ministry receives comment 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," they said.

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

The Commerce and Industry Ministry wants to put the sector under automatic approval route, they added.

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

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.

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