With rising demand from the pharmaceutical industry to put a cap on foreign direct investment (FDI), the Central Government on Thursday announced its decision to form an inter-ministerial group to examine the issue.

The group will be headed by Planning Commission member Arun Maira, Department of Industrial Policy and Promotion (DIPP) Secretary R. P. Singh told reporters here.

The government permits 100 per cent foreign direct investment (FDI) via automatic route.

Mr. Singh said that for brownfield investments, 100 per cent FDI should be permitted but through the approval route. However, concerns were raised by the domestic industry and the Health Ministry over about six takeovers of big Indian pharma companies by global drug majors. The DIPP had also raised concerns over the growing dominance of multinationals in the sector. The department in its discussion paper on the pharma sector has proposed to cap FDI at 49 per cent.

On the proposed national manufacturing policy, Mr. Singh said: “We find everyone opposing it. We are just sleeping over the matter. If they will be silent on the issue, I don't think future is really bright for us,” he said.