In a bid to encourage investments in domestic manufacturing, the government of India allowed 100% foreign direct investment (FDI) under automatic route in the medical devices sector. Such investments would also be exempted from other caveats such as the `non-compete clause', which is applicable for FDI in existing pharmaceutical manufacturing units.
“Easing of norms for medical devices industry by creating a special carve-out in the existing FDI policy in the pharma sector will encourage FDI inflows,” said an official statement issued after the Union Cabinet meeting.
While the move is expected to attract several big ticket investments in the sector, many of them are already lined up in Gujarat, industry sources said. Companies such as Siemens, Philips, GE and Vygon, which already have a presence in the sector, are likely to pour in more money for expansion in the country.
The idea is to bring down imports, while tapping the global market for medical devices by promoting local manufacturing. At present, India imports over 70% of medical devices and the global market for medical devices is estimated to reach over $400 billion next year. The government is set to finalize a proposal for creating a special manufacturing hub for medical devices near Gandhinagar in Gujarat, one source said. The hub will offer single-window clearances for those setting up manufacturing facilities. Companies may also get certain fiscal benefits. Gujarat will also soon have a new laboratory dedicated for testing of medical devices, an industry official said.