Foreign Direct Investment: India Decided To Ease Fdi In Medical Device Sector Essays Examples

In an article published at the Economic Times in December, 2014 it mentioned that the government of India is contemplating of adjust their foreign direct investment policy particularly affecting the medical device sector . This proposal was considered after the sector is believed to be experiencing financial difficulties. The goal of this reform was to encourage foreign investors to finance the struggling industry and enhance the domestic manufacturing of medical devices. The key players in the medical device sector blames the rigid FDI policy to the limitations and difficulties they encounter. One of this restriction is subjecting the sector under government routes. An expert in the medical device sector believes that the government should impose reforms to further grow the sector and offers assurance that the existing manufacturing firms are not in any risk of a merger or acquisition, which is feared by the government.
According to Hill, in his book entitled International Business: Competing in the Global Market, foreign direct investment is advantageous in the case when the cost of transportation and trade barriers are greater in exportation (Hill 259). This is the case with India’s medical device sector. The existing FDI policy relating to medical device exportation is unfavorable considering the increasing cost associated with importation which accounts to 70% of the total demand for medical device in the country. By easing down the FDI policy, there will be sufficient financial resource to manufacture these products in India. Thus, it will trim down the importation expenditures which can boost the industry and create more jobs translating to economic advantage for India as well.
There is a need for the government officials to engage in a discussion that will deliberate on the proposal to create reform in the FDI policy relating to medical device sector because it will help address the financial issues affecting the sector. In addition, this could also help prevent the closure of medical device manufacturing companies in India that could eventually result to a significant decrease in the supply of medical devices in the market.

Works Cited

Hill, Charles. International Business: Competing in the Global Marketplace. New York: McGraw-Hill Higher Education, 2012. Print.
The Economic Times. Economic Policy: Government to soon decide on easing FDI for medical devices sector . 8 December 2014. Web. 28 January 2015.