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

Existing conditions and prior approval required in case of merger and acquisition done away with

By Kundan Pandey
Published: Wednesday 24 December 2014


The Central government has approved 100 per cent foreign direct investment (FDI) in the medical devices sector via automatic route. The approval was given by the Union Cabinet, headed by Prime Minister Narendra Modi, on Wednesday.

Medical devices come under the pharma sector in which 100 per cent FDI through automatic route is permitted only in case of new ventures. Approval of Foreign Investment Promotion Board (FIPB) is needed in the case of brownfield investment—acquisition of existing companies.

At present, the medical devices sector is subjected to FDI limits and other conditions such as mandatory government nods as in the case of brownfield investments in the pharma sector. But the new policy does away with this distinction in the medical devices sector.

For long, industry has been demanding opening the medical device industry for FDI through automatic route, saying there are no big firms for medical devices in India, and so there is no threat of merger or acquisition.

Experts say more than 75 per cent of medical devices come from other countries. The worth of medical devices industry in the country is estimated at US $7 billion.
Medical devices include a wide range of products, such as sutures, implants and surgical instruments.

The move is expected to help attract more investments and boost the domestic manufacturing.

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