100% FDI in Pharmaceutical Sector to Continue
Oct. 12 – An inter-ministerial group presided over by the prime minister has decided to maintain the 100 percent foreign direct investment regime in the pharmaceuticals sector, overruling concerns raised by the health and industry ministries about rising medicine costs due to acquisitions of Indian drug companies by multinationals. The panel advocated that the FDI cap for brownfield pharmaceutical projects, which would include expansion and M&As, be cut to 49 percent, while the ceiling for greenfield ventures be retained at 100 percent.
The decision was the result of discussions in the Union cabinet, though officials from other ministries have questioned the wisdom of roping in the plan panel to arbitrate on the issue since it is neither involved with FDI policy nor is it concerned with clearances. The foreign companies have supported the move saying that a decline in the ceiling would mark the first instance of a sectoral cap being reduced in India.
In cases of brownfield investments in the pharmaceutical sector, FDI will be allowed through the FIPB approval path for a period of up to six months. In this period, the government will put in place the essential enabling mechanism for oversight by the competition commission of India. After six months, the oversight will be done by the Competition Commission of India (CCI) entirely in accordance with the competition laws of the country.
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