100% FDI In Medical Devices in India

Today, the Indian Cabinet has approved 100% FDI in Medical Devices in India.

Till now, FDI (Foreign Direct Investment) in this sector required FIPB (Foreign Investment Promotion Board) approval.

The need for FIPB approval led to long delays in getting foreign funding.

The definition of a Medical Device is broad and includes  “instrument, apparatus, appliance, implant, reagent, calibrator, control material, kit, equipment”. Till this change, Medical Devices were subject to the same rules as pharmaceutical products.

India imports 70% of its annual medical devices requirement of about US$ 7 billion.
It is hoped that the liberalisation of FDI will encourage foreign investment and make India self-sufficient as well as a leading exporter as it is in the pharma sector.

Indian medical device manufacturers welcomed the move saying it would ease access to funds for expansion and make it easier to bring in new technology.

But there is also an apprehension that small Indian manufacturers are vulnerable to takeover by large foreign companies, as happened in the pharma sector a few years ago (e.g acquisitions by Abbott, Mylan etc).

Most medical devices can be imported at zero import duty. But the raw materials are taxed at 10-15% making it unviable to manufacture within India. The medical device industry feels this anomaly has to be corrected as well before the benefits of the new FDI policy can be fully realized.