The Indian Medical Device Industry welcomes Govt. decisions to allow 100% FDI but urges Govt. to exercise extreme caution to ensure that 100% FDI in Medical Devices is used for manufacturing only and not for trading purposes. Unlike in past, where US MNCs (who were invited to set up industry under 100% FDI have only misused that opportunity to setup 100% owned subsidiaries for import, setting up marketing base and warehousing activities rather than for Manufacturing).
Hailing the Government’s proposal to allow 100% FDI in Medical Devices and to identify it as one of the Top 5 Focus Sectors to Reduce Imports Dependability and to Promote Local Manufacturing for the global market, Rajiv Nath, Forum Coordinator, AIMED said “There are hardly 50 Medical Devices manufacturers in India with over Rs 50 Crores turn over. By making 100% auto approval for brown field investment, these battered surviving Indian manufacturers would be easy picking for MNC's. Already, Many Indian manufacturers have made a strategic shift and are now increasingly resorting to imports and trading rather than investing in factories and domestic production”.
“The $5 billion Medical Device market is projected to become $50 Billion by 2025 and investments in this sector will help reduce India’s 70% imports dependency and will also offer a vast potential/ opportunity for the nascent, cash starved Indian Medical Devices Industry to survive and flourish before being killed in its infancy. But, India needs to exercise extreme caution to ensure that 100% FDI in Medical Devices is used for manufacturing only and not for trading purposes and restricted to Green Field projects and not Brownfield” added Mr. Nath.
“However, it is ironic that Medical Devices industry was the first one to be permitted for 100% FDI in manufacturing in India but this was misused grossly by US MNC’s to setup Marketing Organizations and warehouses and not the manufacturing facilities (the purpose for which the FDI was granted) Besides, this grave issue, has not been addressed and corrected in last 2 budgets even after Industry’s repeated and long-standing requests to various ministries particularly Finance to take corrective measures to reduce import dependency” He further added.
Taking into consideration the Govt’s focus on “Make in India”- “Made by India, We earnestly appeal that 100% FDI should be allowed only for the Green Field Projects and not for Brown Field which means only for manufacturing and not for trading or easy buying of the few surviving midsized Indian manufactures in the larger interest of safeguarding and saving the potentially 50 billion $Indian Medical Devices Industry from extinction. Otherwise, Medical Device Industry or India will remain increasingly Import Dependent or on US MNC’s (who were invited to set up industry under 100% FDI but have only used that opportunity to set up Import and marketing organizations and not manufacturing” urged Mr. Nath.
Our humble plea is that in the larger interest and Indian Economy it is more important to make manufacturing viable in India so that even Indian investors can also invest in the field” He added. It’s sad that large corporate like L&T had to exit this sector due to lack of viability instead of fighting competitors like Philips who have been buying out midsized Indian players. Consumers may lose out in the long run without thriving Indian players.
About Indian Medical Device Industry: The US$ 5 Billion Indian Medical Device Market is projected to become $50 billion by 2025. The exports are at over 100 million$ per month. This offers ample opportunities to reduce Import Dependency and promote Local Manufacturing in India. Green field investment means building a new factory from ground and Brown Field investment means buying existing manufacturer.
About AI-MED: AI-MED is an umbrella Association of over 300 Indian Manufacturers of Medical Devices covering all types of Medical Devices including Consumables, Disposables, Electronics, Equipments, Instruments and Diagnostics. It represents the interest of over 700 Manufacturers; however, with over 2000 products we should be over 7000 factories and bigger than Pharma.
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