Foreign Direct Investment 25/04/2019 – Posted in: Daily News

FDI in Medical Devices hurting

For: Preliminary
Topics covered: Foreign Direct Investment, Advantages of FDI in Medical devices


 

News Flash

Blanket implementation of price controls has contributed to a drastic fall in Foreign Direct Investment (FDI) in the medical device sector, pointing to a reduction from $439 million in 2016 to $66 million in 2018.

This decline has happened even though FDI is allowed through automatic route.

 

Background

In 2015 the Centre approved 100% FDI in the medical devices sector via automatic route.  Previously medical devices, which came under the pharma sector, could take in 100% FDI through automatic route only in case of new ventures. Further approval of Foreign Investment Promotion Board (FIPB) was needed in case of acquisition of existing companies.

It is pointed out by some experts price control is having negative impact on new ventures in this sector. Also the research and innovation is being disincentivized in this sector.

 

FIPB

FIPB was an inter-ministerial body housed in the Department of Economic Affairs in the finance ministry responsible for processing foreign direct investment (FDI) proposals and recommending for approval to the finance minister and subsequently to the Cabinet Committee on Economic Affairs if the investment amount exceeded Rs3,000 crore.

FIPB was abolished in 2017 and the individual departments of the government are empowered to clear FDI proposals in consultation with DIPP which also issue s the standard operating procedures for processing applications.

 

DIPP

The Department of Industrial Policy & Promotion was established in 1995 and has been reconstituted in the year 2000 with the merger of the Department of Industrial Development.

With progressive liberalisation of the Indian economy, initiated in July 1991, there has been a consistent shift in the role and functions of this Department. From regulation and administration of the industrial sector, the role of the Department has been transformed into facilitating investment and technology flows and monitoring industrial development in the liberalised environment.

 

Source: The Hindu