Government Okays 100% FDI for Medical Devices

The Government on 6th January, 2015 reviewed the position of Foreign Direct Investment (FDI) in medical devices via the Automatic route & welcomed 100% FDI for medical devices as long as it’s restricted for manufacturing but not for trading. The 100 % FDI will be permitted under the Automatic route, meaning a foreign investor will not have to seek the permission of the Foreign Investment Promotion Board (FIPB) to acquire an existing company or set up a new manufacturing unit in the medical devices sector.

Earlier Companies had to go through the FIPB as medical devices came under the drug category. In a bid to encourage the domestic production of medical devices like pacemakers, nebulizers and cardiovascular stents, the government de-linked it from pharmaceuticals and allowed 100% foreign equity under the Automatic route. This Automotive route would accelerate the process of companies receiving an approval.

The condition of ‘non-compete clause’ as per the policy would also not be applicable to Greenfield (new projects) as well as Brownfield projects (existing units) of this industry. Earlier FDI up to 100% was permitted, subject to certain conditions. While FDI in new projects is under Automatic route, Brownfield projects are placed under the Government approval route.

Lastly, the government has termed a medical device as any instrument, apparatus, appliance, implant, material or other article, whether used alone or in combination, including software, by its manufacturer to be used specially for humans or animals for one or more of the specific purposes. The said decision would take effect from 21st January, 2015.

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