Hospitals and diagnostic centres witness 39% growth in FDI in 2021-22

Gireesh Babu, New DelhiTuesday, May 31, 2022, 08:00 Hrs  [IST]

The hospitals and diagnostic centres sector in the country has reported a growth of 39 per cent in Foreign Direct Investment (FDI) fund infusion during the financial year 2021-22, with fund infusion of around $697.5 million during the year.

The FDI infusion into the sector during the year 2020-21 was around $501.16 million, according to data from the Ministry of Commerce and Industry.

The cumulative investment from April 2000 to the end of March, 2022 was $7.92 billion, while from April 2000 to the end of March, 2021 was $7.23 billion.

It may be noted that the sector has seen the churn in the backdrop of the Covid-19 pandemic, which has initially seriously impacted the normal business. However after the second wave brought under control in the later part of 2021, the hospitals saw the business turning back to normal.

Meanwhile, the Medical and Surgical Appliances sector reported a 202 per cent growth in FDI infusion during the year 2021-22, at $208.04 million as compared to $68.91 million during the previous year.

The cumulative FDI infusion from April 2000 and March 2021 was $2.2 billion, which grew to $ 2.41 billion by March, 2022.

India’s FDI regime has been liberalized extensively in the past. Currently, FDI is permitted up to 100% under the automatic route (i.e., the non-resident investor or Indian company does not require approval from the Government of India for the investment) in the hospital sector and in the manufacture of medical devices. In the pharmaceutical sector, FDI is permitted up to 100% in greenfield projects and 74% in brownfield projects under the automatic route.

Government's think tank NITI Aayog in a report on investment opportunities in health sector, published last year, said that India has emerged as one of the fastest-growing emerging economies over the last two decades, receiving large FDI inflows, which have grown from $ 2.5 Billion in 2000-01 to $ 50 Billion in 2019-20.

The healthcare sector, in particular, has received heightened interest from investors over the last few years, with the transaction value increasing from $94 Million (2011) to $ 1.28 billion (2016) – a jump of over 13.5 times.

This, along with other factors together creates several opportunities for investment in India’s healthcare industry.

After recording a 200 per cent growth in Foreign Direct Investment (FDI) equity inflow into the sector in the previous year, foreign equity infusion into the drugs and pharmaceutical industry in India has registered a decline of 5.1 per cent during the fiscal 2021-22.

The cumulative inflow into the sector has inched upto $19.41 billion from April 2000 to March 2022, according to data from the Ministry of Commerce and Industry.

The FDI inflow into the drugs and pharmaceuticals sector for the fiscal year ended March 31, 2022 was $1.41 billion as compared to $ 1.49 billion inflow reported during the previous fiscal year of 2020-21.