Against the backdrop of an estimated US$ 200 billion spend on India’s healthcare infrastructure by 2022 and with the healthcare industry expected to grow by 17 to 19% CAGR in the next five years, Rajeev Arora, additional?chief?secretary, Government of Haryana, Amit Kumar, Consul General of India, Chicago and Jyoti Arora, special secretary and financial advisor, Ministry of Electronics and Information Technology (MeITY)– Electronics and Healthcare made compelling arguments for Foreign Direct Investment (FDI) into India at a virtual event organized by Nexdigm (SKP) with support from the Consulate General of India, Chicago.
It was also discussed that a number of healthcare companies in the USA are setting their sights on investing in India. The session also highlighted the strong relations between the healthcare sectors of India and the USA, with a large number of US-based players, including Pfizer, Abbott, among others, already present in India.
The long-standing collaboration between the Center for Disease Control and Prevention (USA), the National Institute of Health (USA) and the Indian Council of Medical Research (ICMR) was credited for supporting past and future FDI.
In his remarks, Arora commented, “One of the reasons to select India is the educated workforce, the human resource development in medical and technical fields, as well as the research and development available in this country, is internationally competitive. These factors can add tremendous efficiencies to any business.”
As was aptly explained by Kumar, “The pandemic has invited great collaboration between India and the USA, with multiple companies and agencies working together to fight COVID-19. The government has announced multiple subsidies, including allowing 100% FDI in healthcare, which will augur well for the growth of the healthcare sector in India.”
Kumar also highlighted India’s role in the fight against the pandemic with examples of cross-national collaboration to develop a vaccine. This includes the recently announced international partnership of the Serum Institute of India, as well as Bharat Biotech’s partnership with the University of Wisconsin-Madison.
The supply-side shocks associated with the COVID-19 pandemic have highlighted the business risks due to the concentration of supply from a single source. In international discussions, India has emerged as one of the most attractive FDI destinations, capable of hosting global organizations that are revisiting their manufacturing strategy, trying to hedge their sourcing and production.
With an existing, qualified workforce, India provides an edge for the set-up of new investments and ventures. Substantial subsidies are being offered by the central and the state governments to help businesses jump-start their operations in India. These are further backed by conducive intellectual property laws which are especially important for healthcare players.
Jyoti Arora highlighted the electronics manufacturing industry, which has been a focus area for the Indian government and has seen 25% year-on-year growth over the last four years. The three major incentives introduced were notified by the Ministry of Electronics and IT on April 1 and have a total outlay of Rs. 50,000 crore. These will be beneficial in building a strong ecosystem for pharma and medical devices. States are expected to introduce geotagging facilities for their regions soon, to help investors identify geographies for their investment.
The government’s announcement of the simplification of the corporate tax regime, resulting in an effective 15% tax rate for new manufacturing setups has enhanced India’s competitiveness as an Asian investment destination.
The pro-business attitude is echoed at the state level of governance. While states like Maharashtra and Gujarat have always been at the forefront of incentivizing investment, today, territories like Uttar Pradesh, have also introduced reforms to attract FDI.