Right move gone wrong
While the Centre has rightfully recognised medical devices as a separate category for policy making, its decision to allow 100 per cent foreign investment in the sector will threaten domestic players
Government recognises medical devices as a separate sector, but unrestricted foreign direct investment is not a wise move
WITH THE hope of making healthcare affordable, the Centre on December 24 last year allowed 100 per cent foreign direct investment (fdi) in medical devices sector. The policy also recognised medical devices as a separate category for the first time which was till now a part of drugs. V K Subburaj, secretary, Department of Pharmaceuticals, says the move will reduce India’s excessive dependency on imports for medical devices which at present stand at 85 per cent.The country is ranked among the world’s top 20 medical device users by UK-based research group Espicom. And domestic manufacturers say the demand is increasing every year.
Though the government is right in reading the challenges faced by the industry, the solution, fear manufacturers and experts, has the potential to worsen the situation. Rajiv Nath, coordinator of the Association of Indian Medical Device Industry, says the decision will create problems for small manufacturers. Nath’s concern stems from the fact that most medical device manufacturers in the country are small when compared to global manufacturers. He says just 50 domestic manufacturers have over ` 50 crore turnover in medical devices and most of the others are even smaller. “The move to allow 100 per cent fdi in brownfield projects would make small manufacturers easy pickings for mncs,” says he. Shobha Mishra, director of health services at industry body ficci, says that while the move will help startups get funding, “acquisition of small manufacturer by multinationals” is a fear the government needs to address.
Domestic manufactures have, however, welcomed the decision to create a separate category for medical devices for policy making. As per the Cabinet order, medical devices will now fall under the medical and dental instruments and supplies category. Sanjay Banerjee, chairperson of the India chapter of the Advance Medical Technology Association, an international group of medical device manufacturers, says it was a long-standing demand which has finally been met.