Indian FDI

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India FDI

The report provides a detailed and in-depth analysis of the Indian healthcare market through a

segment-wise evaluation and acquaints clients with reliable market statistics. It identifies current

and past trends of the industry and analyzes the impact in a comprehensive manner.

India is one of the most lucrative healthcare markets globally and in terms of revenue and

employment, it is one of the largest sectors. Delivering affordable health care to India's billion-

plus population itself presents enormous challenges and signifies enormous opportunities for the

medical community and other service providers. Backed by several growth drivers including the

prevalence of various diseases, untapped market, increasing urbanization, rising life expectancy,

and active private sector participation are some of the leading factors supporting the industrys

growth.Multinational players have consistently been focusing on the Indian healthcare market

landscape and trying to enlarge their presence through partnerships and investments. Private

equity funds have already invested US$ 2.53 Billion in 216 healthcare deals since 2005 in India.

The FDI inflows will further escalate in near future on the back of factors, such as entry of

foreign players and liberal regulatory regime.

The Indian hospital industry was estimated to be worth about USD 44 billion as of 2010 and is

predicted to be worth around USD 280 billion by 2020. Further, the Indian hospital service

industry is projected to grow at a compounded annual growth rate of more than 9%. It is

undergoing metamorphosis by broadening focus of the services by using technology,

deliverables and newer applications. The hospitals that were confined to a specified area with

limited infrastructure and services are now expanding mainly due to the foreign investment being

received by the sector. The Indian Healthcare sector is emerging as one of the fast-growing

service sectors in India, contributing 6% to the countrys growth domestic product (GDP)

Important Topics

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Indian Healthcare industry, Foreign Direct Investment, Indian hospital service industry,

Multinational players for FDI

Starting from a baseline of less than $1 billion in 1990, a recent UNCTAD survey projected

India as the second most important FDI destination (after China) for transnational corporations

during 20102012. As per the data, the sectors which attracted higher inflows were services,

telecommunication, construction activities and computer software and hardware. Mauritius,

Singapore, US and UK were among the leading sources of FDI. According to Ernst and Young,

foreign direct investment in India in 2010 was $44.8 billion, and in 2011 experienced an increase

of 13% to $50.8 billion. India has seen an eightfold increase in its FDI in March 2012. India

disallowed OCB's i.e. Overseas Corporate Bodies to invest in India.

On 14 September 2012, Government of India allowed FDI; in aviation up to 49%, in Broadcast

sector up to 74%, in multi-brand retail up to 51% and in single-brand retail up to 100%. In India,

there are many small sectors, medium sectors, private limited companies and public companies

that have been consistently manufacturing various medicinal products to meet the increasing

demands of the people. The foreign investors can invest in Indian companies through the

purchase of shares, debentures, equities, or bonds from an Indian company.

Foreign Direct Investment in Indian Healthcare industry

The Indian healthcare sector is ripe for the expansion and significant growth due to the various

reasons. One of the main factors is increase in the space of medical tourism in India. Medical

tourism in India is growing at a compounded annual growth rate of over 27 per cent during 2009-

2012. Medical tourism market is valued to be worth USD 310 million and is expected to generate

USD 2.4 billion by 2012 and is growing at 30 per cent a year. Due to increasing medical tourism

and greater clinical trial activities in India, there is a need to upgrade the service standards and

provide the state-of-the-art facilities to bring the service levels on par with global standards. Thischanged outlook has created an excellent opportunities for the investors to provide much needed

managerial and financial support.

Foreign investors can play significant role in the development of the hospital sector. This is

evident from the fact that private equity funds have invested over $ 2 billion in healthcare and

life science sector over the past five years. Further, India has received USD 1, 32,837 million as

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aggregate FDI from April 2000 to April, 2011 and specifically hospital and diagnostic centers

have received FDI of USD 1030.05 million from April 2000 up to April 2011 constituting 0.78%

of the total FDI into India.

Opportunities of Foreign Direct Investment in Indian Healthcare industry

The following sectors have significant opportunities for the foreign investors:

i) Health Insurance

The percentage of the Indian population that has been covered under health insurance is

unfortunately very insignificant. Lack of awareness, casual approach is some of the reasons that

have contributed to this. Though there is increase in number of health care insurance policies

over past few years majority of the population remains without any coverage. Growing size of

middle class population in India that spends on healthcare has led to the possibility of emergence

of health insurance market. Health insurance is expected to touch USD 5.75 billion by 2010.

ii) Hospitals and Infrastructure

There is tremendous demand for tertiary care hospitals and specialty hospitals in India. There is a

gap between the availability of the beds and required beds in the hospital in India. It is estimated

that an investment of USD 25.7 will be required to meet the requirement of additional 450,000

beds by 2010. The government would not be playing significant role in bridging this gap giving

private players immense opportunity.

Further, medical tourism industry in India with estimated market of USD 350 million in 2006

and likely to reach USD 2 billion by 2012 will also play significant role in the development of

hospital sectors. It is estimated that this sector has a potential to attract one million medical

tourists each year from all over the world. We have also seen the concepts of Medicity

emerging. Government is encouraging this sector by providing certain incentives like lower

import duties, higher depreciation on medical equipments and expedited visa for patients from

foreign countries. Some trends that have been observed are that most of the healthcare players

have been setting up additional facilities to cater critical care or super specialty healthcare. Some

leading hospital players are very aggressive on raising funds for their expansions. India is also

witnessing growth of advanced diagnostic equipments and excellent infrastructure. Separately,there is also a need for institutions that train professionals, nursing and paramedics to overcome

the shortage of trained professionals in the health care sector in India.

iii) Technology driven services

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Significantly low presence of physicians in rural and semi-urban areas has led to the limited

access to proper healthcare facilities for the people living in these areas. Telemedicine is

considered to be one of the solutions to this lacuna in accessibility to health care services in rural

and semi-urban areas. Growth of IT sector in India which plays crucial role in telemedicine has

led to emergence of this sector in India.

Tele radiology has emerged very fast with increasing number of foreign hospitals active in this

space. Many hospitals have adopted the approach of public private partnerships (PPP) to

render services through telemedicine. Indian Space Research Organization has planned to set up

telemedicine centers across the country by linking various district hospitals. India also has

tremendous potential in the sector of medical equipments and devices ranging from basic

equipments like EKG machines to high end equipments like CT scanners, MRIs etc.

Statement of the Problem

Under FDI, the foreign investors consider the huge return on investment other than the economic

development. Due to the progressive nature of the health care sector in India, several foreign

companies are intending to invest in the country. The Indian healthcare Industry too is

confronted with many challenges, unlike any other emerging sector, several odds that would

restrict or hamper its growth, in spite of huge benefits, derived out of FDI. Indian economy elseotherwise will have opportunities lost, with long standing implications on the economy.

Objectives of the Study

i) To know the opportunities of Foreign Direct Investment in Indian health care sectors.

ii) Tounderstand the reasons for Foreign Investment in Indian health care sectors.

iii) To find out trends of Foreign Direct Investment in health care in India.

iv) To understand the economic impact of Foreign Direct Investment in Indian health caresectors.

Data Analysis and Interpretation

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Table-1: Showing the suitable way of investing in India

Options No of Respondents Percentage (%)

Automatic route 5 25

Prior Permission route 15 75

Total 20 100

Analysis: 75 % of foreign investors consider the prior permission route for

selecting the suitable way of investing in India and 25% consider the automatic

route of investment.

Interpretation: The majority percentage of investors prefers more secure on

investment and they prefer the prior permission route.

Table-2: Showing the preferable location for investment in India

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Urban 15 75

Semi Urban 4 20

Rural 1 5

Total 20 100

Analysis: The 75% investors prefer the urban area as investment location in India.

Semi-urban area considers 20 % and rural are 5%.

Interpretation: The majority percentage of investors prefers urban or big cities for

selecting investment location.

Table-3: Showing the best opportunity of FDI in Indian health care sectors


Health Insurance 5 25

Hospitals 10 50

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Technology driven services 5 25

Total 20 100

Analysis: The majority percentage (50%) of investors considers the best

opportunities of FDI in Indian health care sectors are Hospitals. Health insurance

considers 25% and technology driven services 25%.

Interpretation: The majority percentage of investors considers the best

opportunities of FDI in Indian health care sectors are Hospitals under which they

can earn huge profit.

Table-4: Showing the opinion regarding costs of the medical treatments is

much lower in India than in other developed countries.


Yes 15 75

No 5 25

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Total 20 100

Analysis: 75% of professionals give the favorable opinion regarding costs of the

medical treatments is much lower in India than in other developed countries and 25

% professionals give the opinion against the costs of the medical treatments is

much lower in India than in other developed countries.

Interpretation: The majority of the professionals think that the costs of the

medical treatments are much lower in India than in other developed countries.

Table-5: Showing the opinion on contribution of FDI in Indian health care

industry for Economic Development.


Yes 15 75

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No 5 25

Total 20 100

Analysis: 75% of the professionals show the favorable opinion on contribution of

FDI in Indian health care industry for Economic Development and 25% of the

professionals show the unfavorable opinion on contribution of FDI in Indian health

care industry for Economic Development.

Interpretation: The majority of the professionals show the favorable opinion on

contribution of FDI in Indian health care industry for Economic Development.

Table-6: Showing the opinion on adequacy of existing healthcare

infrastructure in India.


Yes 5 25

No 15 75

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Total 20 100

Analysis: The 75% professionals give the opinion on inadequacy of existing

healthcare infrastructure in India and 25% professionals give the opinion on

adequacy of existing healthcare infrastructure in India.

Interpretation: The majority of the healthcare professionals think about the

inadequacy of existing healthcare infrastructure in India which leads to delay in

proper treatment.

Table-7: Showing the opinion on threats for Indian businessman for FDI.


Yes 18 90

No 2 10

Total 20 100

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Analysis: Among the all respondents, 90% of the professionals think that the FDI

in Indian healthcare sectors generates the threats for the Indian businessman. 10%

of the professionals think that the FDI in Indian healthcare sectors will not

generates the threats for the Indian businessman.

Interpretation: The majority respondents of the professionals think that the FDI in

Indian healthcare sectors generates the threats for the Indian businessman.

Table-8: Showing the opinion on the FDI in health care industry facilitates

better services in Indian healthcare industry.


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Yes 8 80

No 2 20

Total 10 100

Analysis: The majority of the respondents (80%) of general public think the FDI in

health care industry facilitates better services in Indian healthcare industry. 20% of

the respondents of general public think the FDI in health care industry cannot

facilitates better services in Indian healthcare industry.

Interpretation: The majority of the respondents of general public think the FDI in

health care industry facilitates better services in Indian healthcare industry.

Foreign Direct Investment in Indian Healthcare industry can delivers affordable health care to

India's billion of population. The investors can ensure the availability of healthcare infrastructure

in India through foreign direct investment.

Foreign Direct Investment can present enormous opportunities for the medical community and

other service providers. Multinational players can focus on the Indian healthcare market

landscape and try to enlarge their presence through partnerships and investments. The costs of

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the medical treatments are much lower in India than in other developed countries. So, the Indian

people can get better treatment facilities in low cost without going abroad.

Finally, there is a great economic impact of Foreign Direct Investment in Indian health care

sectors which leads to the Indian economic development.

References

1. FDI and Economic Growth: Revisiting the role of financial market development.

2. The Dynamics of FDI and Economic Growth, Sage Publications. Global Business Review,(2012)

Websites

www.indianhealthcare.in

www.expresshealthcaremgmt.com

[email protected]

Questionnaire

Foreign Investors

1. What is the suitable way of investing in India?

a) Automatic route

b) Prior Permission route

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http://www.indianhealthcare.in/http://www.expresshealthcaremgmt.com/mailto:[email protected]://www.indianhealthcare.in/http://www.expresshealthcaremgmt.com/mailto:[email protected]


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2. Which location will you prefer for investment in India?

a) Urban

b) Semi Urban

c) Rural

3. Which one is the best opportunity of FDI in Indian health care sectors?

a) Health Insurance

b) Hospitals

c) Technology driven services

Professionals

4. Do you feel the costs of the medical treatments are much lower in India than in other

developed countries?

a) Yes

b) No

5. Do you feel the FDI in Indian health care industry can contribute for the best part of

Economic Development?

a) Yes b) No

6. Do you feel the existing healthcare infrastructure in India is adequate to meet todays

healthcare demand?

a) Yes b) No

7. Do you feel the FDI in Indian health care industry becomes the threats for Indian

businessman?

a) Yes b) No

General Public

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8. Do you feel the FDI in health care industry facilitates better services in Indian healthcare

industry?

a) Yes b) No

9. Which of the followings is the main determinant of FDI flows into India?

a) Availability of huge natural resources & cheap labor

b) Steady economic growth and increasing PCI

c) Huge benefits and concessions granted by government

d) Availability of huge natural resources & cheap labor and Steady economic growth and

increasing PCI

e) All the above

10. What is the reason for fast-emerging trend in Indian Telemedicine?

a) Remote diagnosis

b) Monitoring and treatment of patients via videoconferencing or the Internet

c) Monitoring and treatment of patients via videoconferencing or the Internet

d) Establishment of telemedicine centers across the country by the Govt.

e) All the Above

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Indian FDI