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7/29/2019 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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Options No of Respondents Percentage (%)
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
Options No of Respondents Percentage (%)
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.
Options No of Respondents Percentage (%)
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.
Options No of Respondents Percentage (%)
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.
Options No of Respondents Percentage (%)
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.
Options No of Respondents Percentage (%)
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.
Options No of Respondents Percentage (%)
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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
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]7/29/2019 Indian FDI
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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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