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India opens medical device industry to foreign direct investment

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SINGAPORE--India's medical device industry will officially open Jan. 21 to unlimited foreign direct investment (FDI) as the government kicks off what is expected to be a year of vast changes in the way it regulates the products.

Under the new rule, the government retains the right to set conditions for FDI in existing India companies on a case-by-case basis. Later this year, the $3 billion-plus local industry itself could be placed under its own regulatory authority for the first time. Currently, only 14 types of devices, even those imported, are regulated by India and those only because they are to be used internally.

Some, such as drug-eluting stents, are associated with pharmaceuticals and thus the 14 are covered by drug regulations. India's device industry is a tiny one, with only 50 manufacturers that concentrate on mostly low-end medical products and produce only 25% of medical devices used in the country. But it is growing at a rate of 15%-18% a year as the nation concentrates on its new "Make in India" policy, according to reports.

The FDI changes were made in the rules governing the pharmaceutical sector and declare that foreign investments up to 100% of a company would be allowed automatically in new operations in India and 100% in existing ones, but with the government allowed to set "appropriate conditions" on the latter investments at the time of approval.

Investors also would not be allowed to insist on "not compete" clauses except in special circumstances as decided by the Foreign Investment Promotion Board. The 50 local makers have cautioned through their Association of Indian Medical Device Industry that the government should be extremely careful in administering the 100% FDI and should limit it to manufacturing only. India's American Chamber of Commerce, on the other hand, has lauded the change as encouraging U.S. companies to invest in India and even to shift production there.

Later this year, the federal cabinet is expected to act on an already approved draft of legislation to bring all medical devices under a new stand-alone regulatory authority under the purview of the Drugs and Cosmetics Act. The transition is likely to be laborious as existing regulations are amended and standards drawn up in line with those of the European Medical Device Directives governing imports, production, marketing and distribution.

The proposed law would establish the Medical Devices Technical Advisory Board to coordinate with national and state authorities on technical and administrative affairs. Other parts of the proposal would establish penalties, including possible jail terms and fines in cases where a device has caused a fatality or bodily harm.

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