India has been an engaging market in the pharmaceutical and health care sector and it has been a dynamic market for FDIs. Still a developing country India has been able to stay in one of the top countries to have a more friendly FDI policy. Recently the country has seen a setback in the economy in many ways, whether it was demonetization or instability due to the new system of GST. However, there still has been a great potential in the country and the booming health care sector is also affected by it. However, before going to the current scenario, it is important to analyze the health sector economy and the role of FDI in it. The health care sector in a country is comprised of many services and aspects such as hospital services, medical technology, new tools which are to be devised, pharma industry, diagnostic services, etc. The health care sector has been predominately secured by the private sector, constituting almost eighty percent (80%) of hospitals in India.[1] The health care sector has been on a continuous verge of redefining technology and establishing a better mechanism for its growth. FDI has played a very crucial role within the health sector to boom the industry per se. The infrastructure and the services are being provided to a larger population due to the foreign investments. This boost has been of a great advantage to the Indian economy as the health sector contributes to six percent of the GDP of the country. Various private hospitals and brands have been on the verge of expansion of the health sector and have played a significant role in the expansion of the same. Various private equity funds or venture capital funds have been invested over in billions in the health care sector and from the year 2000 to 2013 the health care sector has seen a significant boom in the FDIs.[2] Acc. to our ministry ie., Department of Industrial Policy and Promotion (“DIPP”) the total FDI investments during the year 2017 stood at US $ 14.55 billion.[3]

For all this talk of FDI in health care sector it is very important to note all the factors which are involved in this process. There has been a very wide range of possibilities through which such factors are determined and affect the FDI in the health sector. Suneeta Reddy[4] has stated that, “there are two main factors, other than others, which determine the foreign investment in hospitals in India and thus it is because of this that there is limited presence of foreign investment in India’s Hospital segment.”[5] There are various segments of this problem which are discussed in different manner. One of the factors being the internal economic conflicts that goes around in a developing country. It is vital to note that in a developing country such kind of sector goes along a lot of reform and internal changes and thus it is difficult to organize and reform the policies thoroughly on such an instance, especially, when such reform is majorly regulated by the private sector as in the case of health sector in India. The another external problem that is faced by many is that foreign investors tend to invest in country’s with transparency and where the policies are easy to be understood and the whole sector in which investor is investing is familiar to him. However, this is a huge hurdle for India as there are no proper laws or policies and no clear picture of the health sector and in addition to it, there is no transparency in the functioning of the same and the corruption at many levels makes it worse. There are other issues of licensing, regulation of environment norms which is not in proper order, fluctuating economic factors and unattractive population.[6] There are other issues as well for example it becomes difficult for people to invest in the country of which localized and in-depth knowledge they don’t have and thus the most possible way which seems to be solving this problem is of joint venture which, in case of health care sector, creates a lot of problem in management and financial decisions.

There are various domestic challenges as well which makes it difficult for foreign investors to invest in health care sector. There is a high cost involved in setting up a hospital at first and then there is a long life maintainability issue for which the profit comes at much later stage and thus health care in itself is a very dicey sector to invest with. There is a he amount of investment at first hand and then there is expensive cost of maintaining it with high running cost and long development. Such type of combination is not always preferred by the foreign country who intends to put his money in a business in a foreign land. And because of the most of external factors involved it becomes difficult for the foreign investors to invest in a country like India where eventually it’s not just the long term commitment with the business with a longer period for profit but which also gives a very non- transparent type of structure to the whole combination of health care sector. And thus in a country like India joint ventures are more prevalent in such sectors. India‟s healthcare sector falls drastically in international benchmarks due to physical infrastructure and its manpower, and it even falls below the standards existing in comparable developing countries.[7] Furthermore, India’s capability in terms of infrastructure and the skilled human resource is another challenge.

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However, within last year there has been a significant change in the involvement of the foreign investors in the health sector which has been increasing in n number of ways by private equity, venture capitals, domestic or international financial institutions. The healthcare sector is expanding as an industry rapidly and has not been as severely impacted by recent economic slowdown as some of the other industries.[8] Hence, it has been a change in the outcome for the health sector department. There are various ways through which government is proceeding to establish a balance in health care sector and one of them is attracting medical tourists every year. Moreover, there have been developments on the infrastructure side of the health sector as well which was urgently needed in long run. Furthermore, the rise in the establishment of various diagnostic equipments ha also attracted a lot of attention in the last years.[9] There is no doubt on the efficiency of the medical officers in the country and their capability; however, ground staff still needs to be more efficient. The presence of such all qualities in rural areas is equally important.

The healthcare sector has been an advancing sector in terms of FDI and it may be difficult to regulate the structure for the same in the days to come it is important to consider the importance of medical backbone in the country especially in the current scenario. The foreign investment in medical facility strengthens the overall structure of health sector which is an important sector during these times. Thus, it is important that the government takes notices of the small intricacies which are left to be defined in and around the scope of the health sector. Even before considering the policies to be regulated, it is important to fight with the external factors that affect the investments in the country. There has to be a proper structure of the policies of health care sector and some liberties in the FDI policies. Health care is a very prominent and emerging issue and its going to be like this for a long time. For the nations to go through such episodes, it is important that the nation is very well prepared with the medical facility. Thus, it is important to scrape down every little instrument of economic factor that can be regulated and to build a strong structural framework so that the healthcare sector can work excellently in every manner.

[1]J. Francois, FDI in Healthcare Sector and most favoured nations in developing countries, (2006), https://www.researchgate.net/publication/6634985_Foreign_direct_investment_in_the_health_care_sector_and_most-favoured_locations_in_developing_countries

[2]Investment in Healthcare Sector in India, (2016), https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Investment_in_Healthcare_Sector_in_India.pdf

[3]Vivekanand A. Mane, Role of FDI in Development of Indian health Care Sector and Growth of medical Tourism, (2017), http://www.ijirset.com/upload/2017/october/134_IJIRSET%20NOT%20CODED%20%20FINAL%20SUBMISSION.pdf

[4] Suneeta Reddy, Director, Finance, Apollo Hospitals Enterprise ltd., Chennai, https://pdfs.semanticscholar.org/0d4e/b418fc449865f1647c3a42e2731b4aad8b12.pdf

[5] Ibid.

[6] (Chanda Rupa, 2009), IRJC Asia Pacific Journal of Marketing & Management Review Vol.1 No. 2, October 2012, ISSN 2319-2836, www.indianresearchjournals.com

[7] Amulya M, FDI in Indian healthcare Sector, (2014), http://www.indiaenvironmentportal.org.in/files/file/Foreign%20Direct%20Investment%20Health%20Care.pdf

[8] Sunitha l.f., Role of FDI in India’s healthcare Sector, International Journal of Humanities and Social Science Invention, http://www.ijhssi.org/papers/v2(5)/version-3/G253740.pdf

[9] Mr. Ramaiah, Indian Healthcare and FDI, http://indianresearchjournals.com/pdf/APJMMR/2012/October/5.pdf

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