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Finance Ministry’s special group vouches for relaxed FDI policy in pharma sector

12 Jul 2012 Evaluate

Opposing a blanket rule fearing adverse impact on flow of foreign direct investments (FDI) in the sector, Finance Ministry’s special group has suggested that it could consider permitting up to 49% FDI in the automatic route for Brownfield investments in pharmaceuticals sector, given the company’s management control remains in Indian hands. However, the investment beyond the 49% cap would have to pass the Foreign Investment Promotion Board’s (FIPB) muster.

The move could mean substantial relaxation of the current FDI policy, which was tightened in October last year. As per extant policy, 100% FDI in green field investments would be allowed but only after FIPB authorization.

Towards this development, the department of pharmaceuticals in the first week of June proposed that the conditions being finalized for overseas acquisition in Indian pharmaceuticals companies should be applicable for acquisitions of over 49% stake. 

Meanwhile, sensing a prolonged inter-ministerial squabbling over crucial components of the new policy the Prime Minister's Office, recently wrote to finance and industry ministries seeking a progress report on implementation of the changes in the foreign direct investment policy in the pharmaceutical sector, which was finalized nine months ago.

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