Amid continued differences between the Finance Minister, the Department of Industrial Policy and Promotion (DIPP) and the Health and Family Welfare Ministry, the inter-Ministerial group, on Tuesday, left it to the Prime Minister’s Office (PMO) to take a final call on the norms for allowing foreign direct investment (FDI) in the pharmaceutical sector.
“We have reached a final consensus on approvals to the FDI proposals in the pharma sector. The recommendations will now go to PMO for final approval,” a senior official said after the meeting here. However, sources in the DIPP said that the expert group had more or less finalised the new norms with a cap of 49 per cent on FDI in pharma through the automatic route.
The meeting of the inter-Ministerial expert group was attended by officials of the Departments of pharmaceutical, health, DIPP and the Department of Economic Affairs (DEA). It considered various views on imposition of specific conditions on foreign investors. The group is headed by Shanktikanta Das, additional secretary in DEA, and includes representatives of DIPP, Health, External Affairs, and Overseas Indian Affairs Ministries.
In October 2011, a Ministerial group headed by Prime Minister, Manmohan Singh had put foreign investment in brownfield pharma on approval route, changing the 10-year-old policy of automatic clearance to address the Health Ministry’s concerns after a series of acquisitions.
Under the new rules, for any merger or acquisition, the overseas investor will have to seek permission from the Foreign Investment Promotion Board FIPB). After six months, it will be the monopoly watchdog Competition Commission of India (CCI) which will vet such deals. However, there are objections to CCI undertaking such a role and instead various departments have pitched for the FIPB route.
