PM against curbs on FDI in pharma.

NEW DELHI: Prime Minister Manmohan Singh may just have signalled his willingness to keep the doors open for large pharma players to run their business in India. Sources told TOI that at last Friday's Cabinet meeting, when FDI in retail and aviation were cleared, a minister raised the issue of pharmaceuticals, suggesting that there was need to ward off attempts to impose restrictions on foreign capital flowing into the sector.

Singh is learnt to have responded by saying that the sector will be kept open, a move that may go against the high-pitched demand from the commerce and industry ministry to check investment beyond 49% in local pharma firms. Finance minister P Chidambaram and commerce and industry minister Anand Sharma are expected to meet the PM soon to formulate a strategy to ensure that overseas players remain interested in India without compromising on the availability and price of critical medicines.

Contrary to its mandate of boosting foreign investment flows, Sharma's ministry has been seeking regulated entry of overseas players into the sector if they were buying into an existing player - a regime being pushed by local manufacturers in the wake of a series of foreign acquisitions involving Indian companies such as Ranbaxy, Piramal Healthcare and Shantha Biotech. In case they were setting up a new venture, then the exiting policy of 100% FDI would continue.


The acquisitions will come with riders such as allocating a certain proportion of funds for research and development and keeping the product portfolio intact. The domestic industry and the commerce and industry ministry fear that the entry of foreign players into the Indian market may adversely impact the availability of generic medicines as the overseas companies would push patented medicines that are high cost.

While the PM had decided to go with commerce and industry ministry's demand for scrutiny by the Competition Commission of India, the plan did not materialize as the fair play watchdog does not have the legal mandate to vet FDI related proposals, especially when then do not meet the M&A threshold specified by it. Consequently, the Foreign Investment Promotion Board continues to manage the task although nearly two dozen proposals were held up due to inter-ministerial wrangling, especially commerce and industry ministry's reluctance to give a green signal.

While most of the proposals have now been cleared, the government is of the view that it is critical that pharma FDI proposals do not face similar hurdles in the future and the policy uncertainty is cleared.


Source : timesofindia.indiatimes.com