Govt okays 100% FDI in medical devices via automatic route

The government on Wednesday approved 100 percent foreign direct investment (FDI) in medical devices via the automatic route. Currently FDI in pharma exists, albeit with certain riders.

This comes as a major positive for Indian companies as India currently imports over 70 percent of medical devices."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," said an official statement issued after the Union Cabinet meeting.The 100 percent FDI, it added, will be permitted under the automatic route, meaning a foreign investor will not have to seek the permission of Foreign Investment Promotion Board (FIPB) to acquire an existing company or set up a new manufacturing unit in the medical devices sector.Himanshu Baid, managing director, Poly Medicure says this is a significant move as approvals for FDI used to be delayed by months and years earlier.

“Companies had to go through the Foreign Investment Promotion Board (FIPB) earlier as medical devices came under the drug category. This automotive route will help companies receive approval way faster than earlier, he adds.The condition of 'non-compete clause' would also not be applicable to greenfield (new project) as well as brownfield projects (existing units) of this industry. Earlier FDI up to 100 per cent was permitted, subject to certain conditions.

While FDI in new projects is under automatic route, brownfield projects are placed under the government approval route.