New Delhi: In a bid to encourage the domestic production of medical devices like pacemakers, nebulisers and cardiovascular stents, the government Wednesday de-linked it from pharmaceutials and allowed 100-percent foreign equity under the automatic route.
The present policy for pharmaceuticals permits 100 percent foreign equity under automatic route only under some specified conditions, notably greenfield projects. Ongoing projects that may require overseas funding have conditions attached.
Since existing policy clubbed medical devices with pharma, they too were subject to conditions.
"Easing of norms for medical devices industry by creating special carve out in the extant foreign direct investment policy on pharma sector will encourage inflows in this area," an official note said after a nod from the cabinet meeting, presided over by Prime Minister Narendra Modi.
This, the government said, will go a long way in attracting investments in this important sector. "The medical devices industry in the country is substantially import-dependent and is adversely impacted because of the lack of adequate capital and required technology," the statement said.
According to the Association of Indian Medical Device Industry, this industry in India is worth a market of $5-$6 billion annually, but the bulk of it is imported as the customs duty is low. The gross customs duty, in recent years, fell from nearly 30 percent to around 10 percent.
As a result, imports, which account for 77 percent of the market, have been growing at a compounded annual growth rate of nearly 17 percent.
In the interest of some 1,700 domestic manufacturers of medical devices, who had turned traders of imported goods rather than manufacture them in India, the association had asked for removing this area from the purview of the Drugs and Cosmetics Act.
The cabinet has termed a medical devices 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.