Finance Minister P Chidambaram on Monday said the government will soon finalise the foreign investment policy on brownfield pharmaceutical projects, paving the way for clearance of held-up proposals. "...I believe the discussion (with regard to FDI in brownfield pharmaceuticals) between the Ministry of Commerce and Prime Minister and others is likely to take place today or tomorrow," he said.
Once the policy is approved, proposals that were kept in abeyance by the Foreign Investment Promotion Board (FIPB) would move forward. The Minister said, "Whichever (proposal cleared by the FIPB) has to go to CCEA will go to CCEA and whichever has to be approved by me will be approved by me."
The Department of Industrial Policy and Promotion (DIPP) is in the process of finalising its FDI policy on brownfield pharma projects involving transfer of control. The Commerce Ministry is concerned about the fact that an overwhelming majority of foreign direct investment in pharma is in existing units (brownfield investments).
Production of many critical drugs and medicines has been lost and India is already import-dependent for intermediates and vital drugs like penicillin, which is a matter of serious concern, sources said. According to RBI data, between April 2012 and April 2013, as much as USD 989 million FDI was received in brownfield investment, and a mere USD 87.3 million in Greenfield projects.
The DIPP had raised concerns over the spate of acquisitions of domestic pharma firms by multinationals, saying that more than 90 per cent of the FDI is in brownfield pharma. Currently, India permits 100 per cent FDI in the pharmaceutical sector through the automatic approval route in new projects, while foreign investment in existing pharmaceutical companies is allowed only with the FIPB's approval.
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