100% Foreign Direct Investment Regime in Pharmaceutical Sector.

NEW DELHI: A high-level inter-ministerial group chaired by the prime minister has decided to continue with the 100% 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.

But the takeover of Indian drug companies by foreign companies, or brownfield investment, will face stringent scrutiny by the country's competition authority to ensure they do not facilitate collusion and predatory pricing.

There will be no scrutiny of greenfield investment by foreign drug companies in the pharma sector. "There is going to be no cap. 100 % FDI would be allowed but acquisition proposals will be looked at very carefully," Planning Commission member Arun Maira said after a meeting with the prime minister.

The meeting was attended by finance minister Pranab Mukherjee, health minister Ghulam Nabi Azad, commerce & industry minister Anand Sharma, pharmaceutical and chemical Minister MK Alagiri, and deputy chairman Planning Commission Montek Singh Ahluwalia.

"In case of brownfield investments in the pharma sector, FDI will be allowed through the FIPB approval route for a period of upto six months," an industry ministry release said. In this period the government will put in place the necessary enabling mechanism for oversight by the competition commission of India.

After six months the 'oversight will be done by the CCI entirely in accordance with the competition laws of the country' the industry ministry said. "The committee has recommended some changes (rules) in CCI to strengthen it. We have decided on a six-month timeline to implement these changes," Maira said.

The government had set up a committee under Maira to reconsider the liberal foreign direct investment policy that allows 100% foreign investment though automatic route following concerns that unfettered acquisition of Indian drug companies would eventually deny cheap drugs to Indians.

Source : economictimes.indiatimes.com