(Photo: Reuters) 
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(Photo: Reuters) The Union Cabinet on Wednesday approved liberalising the foreign direct investment (FDI) policy for the cash-starved medical devices sector.
The proposal to relax the FDI policy was considered and approved, sources said after the meeting of Union Cabinet headed by Prime Minister Narendra Modi in the national capital.
This is expected to help attract more investments and boost domestic manufacturing in the industry, which is estimated at around US $7 billion.
At present, the medical devices sector falls under the pharmaceutical category and is accordingly subjected to FDI limits and other conditions such as mandatory government nods.
While 100 per cent FDI is permitted in the pharma sector, the foreign investment is permitted through automatic route in the case of greenfield investment or new venture and the Foreign Investment Promotion Board (FIPB) approval is required in the case of brownfield investment or in existing companies.
There are several other riders, including FDI in medical devices sector being permitted through the government-approval route and the industry has been demanding it be put under the automatic route.
Stressing on the need for greater FDI in medical devices and equipment sectors, the industry feels there is no threat of mergers and acquisitions from multi-national firms as domestic companies are not big, unlike the drug firms.
As per estimates, the country imports about 70 per cent of its requirement of medical devices.
Medical devices include wide range of products such as sutures, implants and surgical instruments.
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