Panel seeks review of FDI in private hospitals, warns of aggressive corporatisation, rising healthcare costs
The Department-related Parliamentary Standing Committee on Health and Family Welfare tabled its 176th Report on "Affordability and Accessibility of Healthcare Facilities in Public and Private Sector," making 368 recommendations
The report calls for a review of the Foreign Direct Investment (FDI) regime governing the management and acquisition of existing private hospitals, while suggesting FDI continue to be encouraged in domestic manufacturing of medical devices, consumables, and specialised medicines for rare diseases
The committee recommends an institutional mechanism to cap costs on routine procedures, specialised treatments, and clinical diagnostics, and suggests capping hospital room charges at levels comparable to a nearby three-star hotel
It proposes that hospital revenue from medical tourism and high-net-worth patients be used to cross-subsidise tertiary care for economically weaker domestic patients
The report recommends mandatory Jan Aushadhi Kendras within large private hospitals empanelled under government health schemes, and additional AIIMS or satellite centres to reduce dependence on private facilities
FDI Policy in the Hospital Sector
India permits 100% FDI in the hospitals sector under the automatic route, a policy in place since 2000, meaning no prior government approval is needed for foreign investment in setting up or acquiring hospitals. The Consolidated FDI Policy, administered by the DPIIT (Ministry of Commerce and Industry), governs sectoral caps and entry routes across the economy; hospitals fall among the sectors with the least restriction. The Parliamentary panel's recommendation is not to ban FDI but to distinguish between FDI in manufacturing of medical devices/drugs (encouraged) versus FDI in ownership/acquisition of existing hospital chains (flagged for review).
Key Details
- FDI entry routes: Automatic route (no prior government approval) vs Government route (approval required via the relevant administrative ministry)
- Hospitals and medical devices manufacturing are both under 100% automatic route currently
- Statutory basis: Foreign Exchange Management Act (FEMA), 1999, and the Consolidated FDI Policy Circular issued periodically by DPIIT
- Sectors with restricted/prohibited FDI include lottery, gambling, and atomic energy (illustrating the automatic-vs-prohibited spectrum)
The committee's call to review — not necessarily reduce — FDI limits specifically for hospital acquisition and management reflects a policy tension between attracting foreign capital for healthcare infrastructure and preventing excessive corporatisation that could raise treatment costs for domestic patients.
Department-Related Parliamentary Standing Committees (DRSCs)
DRSCs are permanent committees that scrutinise the functioning, budget, and policy of specific ministries/departments, providing detailed, non-partisan examination that plenary sessions of Parliament cannot achieve given time constraints. They were established in 1993 and expanded in 2004, and their reports (like the 176th Report cited here) are recommendatory, not binding on the government.
Key Details
- Originally 17 DRSCs set up in 1993, each covering specific ministries; expanded to 24 in July 2004
- Each DRSC has 31 members: 21 from Lok Sabha and 10 from Rajya Sabha, nominated by the Speaker and the Chairman, Rajya Sabha respectively
- Of the 24 DRSCs, 16 fall under the Speaker's (Lok Sabha) jurisdiction and 8 under the Rajya Sabha Chairman's jurisdiction
- Committee recommendations are advisory; the government is required to respond via an Action Taken Report but is not bound to implement them
The 176th Report is one such DRSC output — a formal parliamentary review mechanism, distinct from an executive policy announcement, which is why its FDI recommendation triggers further government examination rather than an immediate rule change.
Out-of-Pocket Health Expenditure and India's Healthcare Financing
Out-of-pocket expenditure (OOPE) refers to direct payments made by households at the point of accessing healthcare, excluding any reimbursement. India's National Health Accounts, prepared under the Ministry of Health and Family Welfare, track OOPE as a share of Total Health Expenditure (THE) — a key indicator of financial protection in healthcare and a recurring UPSC data point.
Key Details
- OOPE as a share of Total Health Expenditure fell from 64.2% (2013-14) to 39.4% (2021-22), a decade-long decline attributed to expanded public health insurance
- OOPE rose again to 43.4% in 2022-23 (about ₹3,82,629 crore, or ₹2,767 per capita), reversing the declining trend
- Social security health expenditure (government insurance schemes, employee medical reimbursement) rose from 5.7% (2014-15) to 8.7% (2021-22) of total health spending
- National Health Policy, 2017 target: public health expenditure to reach 2.5% of GDP (still not fully achieved)
The committee's push to cap treatment and room charges directly targets the OOPE burden, since uncapped private hospital pricing (amplified, in the panel's view, by FDI-driven corporatisation and the medical tourism boom) is a major driver of high household health spending.
Jan Aushadhi Scheme and Affordable Medicines
The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) provides quality generic medicines at affordable prices through dedicated outlets called Jan Aushadhi Kendras. The committee's recommendation to mandate these Kendras within large private hospitals extends an existing public-health-access tool into a sector where it does not currently apply.
Key Details
- Launched November 2008 by the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers; revamped in 2015 as Pradhan Mantri Bhartiya Janaushadhi Pariyojana
- Over 15,000 Jan Aushadhi Kendras operational as of early 2025, with a target of 25,000 by March 2027
- Distinct from Ayushman Bharat-PM Jan Arogya Yojana (PM-JAY), which is a health insurance scheme (₹5 lakh cover per family per year) rather than a medicine-pricing scheme
- Generic medicines under PMBJP are typically priced 50-90% lower than branded equivalents
Mandating Jan Aushadhi outlets inside private hospitals is proposed as a direct, low-cost intervention to offset the higher treatment and consumable costs associated with corporatised hospital chains.
- Report: 176th Report of the Department-related Parliamentary Standing Committee on Health and Family Welfare, "Affordability and Accessibility of Healthcare Facilities in Public and Private Sector" — 368 recommendations, tabled August 2026
- FDI in hospitals: 100% permitted under the automatic route since 2000
- DRSCs: 24 committees, 31 members each (21 Lok Sabha + 10 Rajya Sabha), established 1993, expanded 2004
- OOPE share of Total Health Expenditure: 64.2% (2013-14) to 39.4% (2021-22), rising again to 43.4% (2022-23)
- OOPE in absolute terms (2022-23): approximately ₹3,82,629 crore, or ₹2,767 per capita
- Jan Aushadhi Kendras: over 15,000 as of early 2025; target of 25,000 by March 2027
- National Health Policy 2017 target: public health spending at 2.5% of GDP