(Reuters) — India has made it easier for foreigners to fully own existing medical device makers in the country, in a bid to boost investment in the $7 billion sector.
The government said Dec. 24 that foreigners wanting to buy 100% of device makers no longer need to get prior approval.
India has already allowed full foreign ownership of new companies, but the requirement for prior approval for purchases of existing firms has kept down investment in manufacturing.
In a statement, the government said it was easing "norms" for the medical devices industry to encourage inflows of foreign direct investment, adding that the domestic capital market "is not able to provide much needed investment in the sector.”
India currently imports about 70% of its medical devices requirement from overseas, HDFC Securities estimates.
Shares of device makers jumped Christmas Eve, the day of the government’s decision. Shares in Opto Circuits (BOM:532391) surged almost 16%, while Siemens India (NYSE:SI) gained 2.2%.
Rahul Guha, partner & director at Boston Consulting Group, welcomed the move but said the government needs to do more to boost the medical devices industry.
"This needs to be followed up with clarity on price regulation as well as manufacturing incentives before foreign players consider India," Guha said.