Liberalised FDI Policy for Medical Devices

Advances in technology in the field of medicine have helped to save many lives. While it may appear that it is the doctor who gets to play God, there are a number of other players who play a part in making miracles Technology is helping us to look deeply into a fully functional human being, to stop a person’s life for a while and then resume it, to cut out a part from one person and fit it into another or to help a blind person see through the eyes of another. All this is made possible by improvement in medical devices.

From robots that can carry out surgery to endoscopes that can be stuck into either end of your body, medical devices have proved extremely useful in the hands of doctors. These devices are essential to save lives and most major hospitals are equipped with these machines and other equipment.

In India, it is another story. India lags behind in the manufacture of these machine and many of them are being imported from countries such as Japan and Germany and the United States. These are very expensive machines, and even after exemption from import duty, still increase the cost of healthcare manifold. As of now the medical devices is categorized into pharmaceutical and are subjected to FDI norms and government approvals.

Realising the importance of these machines in delivering quality healthcare and the fact that these machines should be available in plenty and at reasonable cost, and accepting that the technology required for the making of these machines is not necessarily found in India, the Government of India has relaxed the rules allowing for the flow of Foreign Direct Investment into the medical devices sector. A press release from the Commerce and Industry Ministry said that with effect from January 21st, FDI will be allowed one hundred percent into the medical devices sector. This was allowed by the Cabinet last month and it is expected that the move will allow flow of investment into the cash starved medical devices sector and boost the domestic manufacturing sector.

The term medical devices itself has been defined very widely to 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.’

The investment will be allowed one hundred percent under the automatic route. The non-compete clause, which is applicable to many sectors, will however not apply to investments in the medical devices sector, be it in green field projects or brown field projects. These relaxations are expected to benefit investment in the sector greatly. Given that the high costs in medicine are largely on account of the cost of the medical equipment, this should help to reduce healthcare costs substantially.

Atreyee Roy (have 690 posts in total)

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