Review stance on FDI in pharma sector: FinMin to commerce ministry.

In its keenness to solve the contentious issue of foreign direct investment (FDI) in the pharmaceuticals sector, the finance ministry has once again put the ball in the commerce and industry ministry’s court asking it to review its stance on the issue.

The move comes after an internal meeting of the finance ministry earlier this week to examine issues relating to the FDI pharma sector and streamline the process of approvals.

“The meeting studied the report of the inter-ministerial group (IMG) and it was decided that the Department of Industrial Policy and Promotion (DIPP) should review its concerns over automatic approval for deals involving up to 49 per cent FDI. The finance ministry will be writing to them on the issue,” a person close to the development said, adding that no further deliberations have been planned on the issue.

“With pressure from the Prime Minister’s Office to resolve this issue, due to which investments of over Rs 1,000 crore are hanging fire, we are hopeful that the DIPP will firm up its mind soon and reverse its stand,” the source said.

The DIPP, in the Anand Sharma-led commerce and industry ministry, has been the only hold out to recommendations of a PMO-appointed IMG which suggested that the Foreign Investment Promotion Board (FIPB) should only approve proposals involving buy outs of domestic pharma companies for above 49 per cent inflow, subject to conditions relating to research and development and production of generic medicines. Instead, the usually investor friendly DIPP has instead suggested that all deals in the pharma sector should get approval from the FIPB.

Consequently, the FIPB in its meeting on July 27 was once again forced to defer long pending deals of foreign pharma companies at the behest of the DIPP.

Source : indianexpress.com