Fdi in Indian Healthcare Sector

Topics: Foreign direct investment, Investment, Medicine Pages: 2 (539 words) Published: August 25, 2013
An overview on Foreign Direct Investments (FDI) in Indian health-care sector

Healthcare is one the fastest growing service sector in India, contributing 6% to the country’s Gross Domestic Product (GDP).Providing affordable health care to India's billion-plus population is an enormous Challenge and also presents great opportunities for the growth of healthcare sector. India has high prevalence of various diseases, untapped market, increasing urbanization, rising life expectancy, growing medical tourism and active private sector participation are some of the leading factors supporting the industry’s growth. Because of these factors, projected growth of healthcare sector in India is more than 9% annually. Therefore, many foreign players want to enter India’s healthcare sector through FDI in various segments.

Foreign Direct investment (FDI) can be defined as an investment involving a long-term relationship, and reflecting a lasting interest and control, of a firm or individual from one country in another. Thus, FDI provides capital as well as technology to grow at substantial rate. Indian healthcare sector can be benefitted by FDI significantly.

Indian policy is favourable for FDI in healthcare sector. Since January 2000, FDI is permitted up to 100 per cent under the automatic route in hospitals in India. Though the supportive policies and huge opportunities,, Indian Healthcare Sector could attract only .0.75% of total FDI flow in India. Many factors are responsible for that.

Main reason is that, in many countries including some of developed countries, healthcare is not privatised. In these countries either healthcare has many regulations or government itself provides healthcare services or insurance to its citizens. Thus lack of many big players in healthcare providers in foreign countries limits the scope of FDI in healthcare.

Other factors include the initial establishment related and after that operation related cost. Hospitals have very...
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