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The Cabinet committee on economic affairs (CCEA) is expected to take up a proposal of changing the foreign direct investment (FDI) policy in brown field projects in the pharmaceutical sector soon. The department of industrial policy and promotion (DIPP) under ministry of commerce and industry is in the process of finalizing a draft note for consideration.
However, the changes will not impact the pending applications.
However, the changes will not impact the pending applications.
This is being done after Prime Minister Manmohan Singh today chaired a high-level meeting urging the process “to be expedited”, a senior DIPP official who was present in the meeting told Business Standard. This was the third such meeting in last two years.
“The FDI policy in pharmaceuticals will be changed much beyond than what is currently existing. However, all changes will be prospective. The cabinet note is getting ready and it will be presented before the committee at the earliest after consultations with all ministries are over. We will ensure that the new FDI policy will not impact availability of life-saving drugs and introduction of new drugs,” the DIPP official said.
The official also added that the new FDI policy in pharmaceuticals will consider imposing “some stringent riders” even as it is learnt that the government is working towards “making the policy more liberal.”
Commerce and industry minister Anand Sharma later said that new policy will make sure that effective safeguards are put in place and monitored.
“In today’s meeting there were two dimensions. There are some concerns particularly in regard to oncology, injectibles and some of the vaccines where we feel that critical needs must be met at all costs and that the policy will ensure. The present proposals, before the FIPB or as approved by it those will go through under the existing policy. And if there are safeguards required, that will be discussed. As to what should be the nature of those safeguards so that affordable life saving medicines are available to the people and that the policy ensures,” Sharma said.
Sharma also hinted at the fact that all pending proposals that are currently lying with the Foreign Investment Promotion Board (FIPB) might be cleared soon under the policy extant. The significant one being Rs.5,000-crore FDI proposal by US-based Mylan Inc. to acquire Agila Specialties. This is so far the largest FDI deal that has landed on the government’s table this year.
The air was further cleared by economic affairs secretary Arvind Mayaram who said that the all pending cases would be examined in the light of the existing policy.
“The decision is that the policy as it exists today would be applicable on pending applications,” said Mayaram. But if there is a need to review it for fresh proposals then the concerned ministry would bring out a discussion paper on it, he added.
Mayaram said individual proposals were not discussed in the meeting with the PM.
At present, 100 per cent FDI is allowed in new projects through the automatic route in the pharmaceuticals sector, while 100 per cent is also permitted in existing facilities subject to government’s permission.
The imbroglio had been on since 2011 when the ministry of health and commerce and industry raised concerns over a series of takeovers by international pharmaceutical majors. As a result the FDI policy was reviewed. A panel under Planning Commission member Arun Maira was constituted that recommended giving more teeth to the Competition Commission of India (CCI) in allowing mergers and acquisitions (M&A) in the pharmaceutical sector and not changing the foreign direct investment (FDI) rules.
However, it later emerged that the CCI Act could not be amended and till such time the government works out another mechanism all proposals concerning FDI in existing companies will be taken up by the FIPB.
Finance ministry under the committee headed by Mayaram had batted for government’s control on proposals that seek to invest beyond 49 per cent up to 100 per cent.
A Parliamentary panel, chaired by BJP MP Shanta Kumar, recently suggested a complete ban on FDI in existing pharmaceutical companies as it was against public good. ---ENDS---
