Industry hails move; asks for more changes to “pro imports” policies
In a Christmas gift to the medical devices sector, the Union Cabinet gave its approval to carve out medical devices into a separate sub-category and amended the existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector to allow 100 per cent FDI in both greenfield and brownfield projects.
An official statement issued after the Union Cabinet meeting referred to the disparity in the growth of the pharma and medical devices sectors, commenting that while the country has the talent required for both sectors, the domestic capital market is not able to provide much needed investment in the med devices sector.
The statement made the point that the pharma and medical devices were two different industrial activities. The ‘non-compete’ clause was imposed on the pharma sector to ensure that Indian manufacturers could continue to manufacture generic drugs and cater to the needs of the large number of people in the country and in other developing countries who cannot afford branded and patented drugs. This clause was not relevant to the medical devices industry of India, where the country is substantially import dependent and the sector is adversely impacted because of the lack of adequate capital and required technology, stated the note.
Hence the need to carve out a separate sub-category with amended rules. It is hoped that these moves will will encourage FDI inflows in the medical devices area.
Industry reaction has been positive, calling for more steps in this direction. While welcoming the Government’s move Dr GSK Velu, Founder and Managing Director, Trivitron opined that 100 per cent FDI in the sector was already in existence citing the fact that many MNCs have 100 per cent subsidiaries in India, though predominantly with trading and distribution focus.
He suggested that as a part of this new initiative, actions should be taken to control and restrict 100 per cent trading subsidiary operations in India as he alleged that these trading subsidiaries do not have any manufacturing intent and in fact even distribution margins are being expatriated back to their parent countries by adopting several means.
Hence according to him, apart from 100% FDI in the sector, the Government should create the right eco system for manufacturing in the country which presently has “pro Imports” policies with inverse duty structure, lack of control on imports using high sea sales route and no coordinated efforts between academia/ Indian industry in the R&D initiatives.