RBI/2013-14/567
A.P. (DIR Series) Circular No.124
April 21, 2014
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Foreign Direct Investment in Pharmaceuticals sector – clarification
Attention of Authorised Dealers Category – I (AD Category - I) banks is
invited to
A.P. (DIR Series) Circular No.56 dated December 9, 2011 and the
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
Outside India) Regulations, 2000, notified vide
Notification No. FEMA 20/2000-RB
dated May 3, 2000, as amended from time to time. In terms of Schedule 1 to the
Notification ibid, Foreign Direct Investment (FDI) up to 100 per cent is
permitted under automatic route for greenfield investments and FDI up to 100 per
cent is permitted under Government approval route for brownfield investments
(i.e. investments in existing companies) in pharmaceuticals sector.
- The extant FDI policy for pharmaceutical sector has since been reviewed
and it has now been decided with immediate effect that the existing policy would
continue with the condition that ‘non-compete’ clause would not be allowed
except in special circumstances with the approval of the Foreign Investment
Promotion Board (FIPB) of the Government of India.
- A copy of Press Note No.1 (2014 Series) dated January 8, 2014 issued in this
regard by Department of Industrial Policy and Promotion, Ministry of Commerce &
Industry, Government of India is enclosed.
- AD Category - I banks may bring the contents of the circular to the notice of
their customers/constituents concerned.
- Reserve Bank has since amended the subject Regulations accordingly through
the Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) (Amendment) Regulations, 2014 which have been notified
vide
Notification No. FEMA.296/2014-RB dated March 3, 2014, vide G.S.R. No.
270(E) dated April 7, 2014.
- The directions contained in this circular have been issued under Sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(C.D.Srinivasan)
Chief General Manager