Panel seeks review of FDI in private hospitals, warns against aggressive corporatization and rising healthcare costs

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A parliamentary committee has recommended a review and rationalization of foreign direct investment (FDI) limits governing the operation and acquisition of existing private hospitals, warning that aggressive corporatization and foreign capital inflows could increase healthcare costs and undermine the affordability of medical care.

The growing presence of foreign capital in private hospital chains is facilitating the acquisition of cost-effective mid-sized hospitals by larger corporations, the committee said, warning that such “aggressive corporatization” is turning health care from a public service into a “purely capitalist enterprise,” with the potential to inflate the cost of medical procedures and trigger price increases throughout the health care ecosystem.

Foreign investment in private hospitals will make treatment unaffordable: RJD

The ministry-linked Parliamentary Standing Committee on Health and Family Welfare, headed by Samajwadi Party (SP) Rajya Sabha MP Ram Gopal Yadav, presented its 176th report on “Affordability and Affordability of Healthcare Facilities in the Public and Private Sectors”, which distinguishes between foreign investment in hospital operations and investment in healthcare manufacturing.

Foreign capital should be encouraged in the production of medical devices, consumables and specialized drugs for rare diseases, the report says, while its use in direct operation and acquisitions of hospitals requires greater scrutiny.

The report advised the government to strictly review and rationalize FDI limits on operational management and acquisition of existing health facilities, while creating incentives to redirect foreign investment into domestic production of health technologies and drugs.

The committee also argued that a strong public health system could act as a market regulator by providing an affordable alternative to private care. Efficiently managed public hospitals could put competitive pressure on private providers and help reduce health care costs, he said.

It recommended the establishment of autonomous, efficiently managed public multi-specialty hospitals in each revenue division to reduce patient dependence on large cities and minimize travel for tertiary care.

The panel’s recommendations come against a backdrop of a widening gap between public and private spending. Citing the 80th round of the national sample survey, the committee said the average cost of hospitalization is ₹50,508 in private hospitals compared to ₹6,631 in government hospitals. Separately, it called for mechanisms to standardize and limit the cost of basic treatment, diagnosis and routine procedures in private hospitals.

At the same time, the committee proposed incentives – including tax holidays, soft loans, subsidized land and subsidized electricity – to attract private investment in multi-specialty hospitals in Tier 2, 3 and rural areas. It proposes that public-private partnerships be used to extend advanced medical technology and specialized services to underserved regions.

Private hospitals that receive government incentives should also consider cross-subsidizing, with revenue from higher-paid patients, including international patients, helping to subsidize treatment for poorer patients, the committee said.

It further recommended increasing mandatory bed reservation for Below Poverty Line (BPL), Economically Weaker Section (EWS) and AB-PMJAY (Ayushman Bharat Pradhan Mantri Jan Arogya Yojana) users from 10% to 20%, citing weak enforcement of existing obligations by private hospitals.

The committee also called for hospital-level ethics committees to review specialist fees and for stricter regulatory oversight of public-private partnerships to ensure compliance with commitments to provide affordable care.

It proposed a single window mechanism to facilitate regulatory approvals for health facilities in smaller towns and called for greater involvement of private hospitals in aspirational and remote districts under AB-PMJAY.

The point of the recommendation is that private and foreign capital should complement, not replace, public investment in health care, with incentives linked to affordability, geographic access and services for vulnerable populations.

Published – 12 Aug 2026 16:05 IST