Parliamentary Panel Seeks Review of FDI in Private Hospitals, Warns of Rising Costs
A parliamentary committee has recommended a review and rationalisation of Foreign Direct Investment (FDI) limits governing the operation and acquisition of existing private hospitals. The panel warned that aggressive corporatisation and an influx of foreign capital could push up healthcare costs and undermine the affordability of medical care.
The Department-related Parliamentary Standing Committee on Health and Family Welfare, chaired by Samajwadi Party Rajya Sabha MP Ram Gopal Yadav, presented its 176th report on 'Affordability and Accessibility of Healthcare Facilities in Public and Private Sector' to Parliament. The report distinguishes between foreign investment in hospital operations and investment in healthcare manufacturing.
The committee noted that the growing presence of foreign capital in private hospital chains was facilitating the acquisition of cost-effective, mid-sized hospitals by larger corporate entities. It warned that such aggressive corporatisation was transforming healthcare from a public service into a purely capitalistic enterprise, with the potential to inflate the cost of medical procedures and trigger price increases across the healthcare ecosystem.
While recommending that foreign capital be encouraged in the manufacture of medical devices, consumables, and specialised medicines for rare diseases, the report called for greater scrutiny of foreign investment in the direct operation and acquisition of hospitals. It recommended that the government strictly review and rationalise FDI limits concerning operational management and acquisition of existing healthcare facilities.
The committee also proposed creating incentives to redirect foreign investment towards domestic manufacturing of medical technologies and pharmaceuticals. It argued that a strong public healthcare system could act as a market regulator by providing an affordable alternative to private care. Efficiently managed public hospitals, it said, could exert competitive pressure on private providers and help bring down healthcare costs.
The panel recommended the establishment of autonomous, efficiently managed public multi-speciality hospitals in every revenue division. This, it said, would reduce patients' dependence on major cities and minimise travel for tertiary care.
The recommendations come against the backdrop of a widening public-private cost gap. Citing the 80th round of the National Sample Survey, the committee said the average cost of hospitalisation was ₹50,508 in private hospitals, compared with ₹6,631 in government hospitals. It has separately called for mechanisms to standardise and cap the cost of essential treatments, diagnostics, and routine procedures in private hospitals.
The committee has simultaneously proposed incentives — including tax holidays, soft loans, subsidised land, and concessional electricity — to attract private investment in multi-speciality hospitals in tier-2, tier-3, and rural areas. It suggested that public-private partnerships be used to extend advanced medical technologies and specialised services to underserved regions.
Private hospitals receiving government incentives should also consider cross-subsidisation, with revenues from higher-paying patients, including international patients, helping subsidise treatment for poorer patients, the committee said.
It further recommended raising the mandatory reservation of beds for Below Poverty Line (BPL), Economically Weaker Section (EWS), and Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) beneficiaries from 10% to 20%, citing weak enforcement of existing obligations on private hospitals.
The committee also called for hospital-level ethics committees to examine professional fees and for stronger regulatory oversight of public-private partnerships to ensure that commitments to provide affordable care are honoured. It proposed a single-window mechanism to ease regulatory approvals for healthcare projects, while ensuring compliance with affordability norms.
