Mega FDI Plan to Focus on Faster Pharma Approvals
Rose Nor
The government has begun examining ways to shore up foreign investments, including a fast-track mechanism to clear applications of companies especially in the pharmaceutical sector that are looking at India with the US pushing its companies to relocate from China.
As part of the exercise, the Department for Promotion of Industry and Internal Trade (DPIIT) plans to put in place a database of all foreign direct investment (FDI) applications, queries from investors and the problems they have faced, so as to generate confidence in global investors that India’s response is quick.
It has asked experts and law firms to identify drawbacks and misuse of the country’s FDI policy to plug loopholes, and how the beneficial-ownership definition is missing from the FDI law.
“We are examining the entire FDI model, especially ways to boost investment in the pharmaceuticals sector and how can it be treated separately. We are studying different global models of pharmaceutical FDI,” said an official in the know of the details.
India allows 100% FDI in greenfield, or new, pharma projects under the automatic route. For brownfield pharma, or investments in existing companies, up to 74% FDI is allowed under the automatic route and approval is required beyond that.
Moreover, FDI in brownfield pharmaceuticals, under both automatic and government-approval routes, is subject to compliance of conditions such as maintaining the production level of the drugs on the National List of Essential Medicines, consumables and their supply to the domestic market at the time of induction of FDI, and on R&D expenses
India, however, allows FDI up to 100% under the automatic route for manufacturing medical devices.
At a meeting with commerce and industry minister Piyush Goyal last week, law firms suggested that the government may consider 100% FDI in brownfield pharma and do away with the conditions.
The United Nations Conference on Trade and Development expects global FDI to shrink 30 40% in FY21 due to the Covid-19 pandemic. India’s FDI inflows fell 1.44% on year to $10.67 billion in the October-December period of FY20.
The government is also concerned that very little FDI came in the insurance sector since the limit was raised to 49%. India recently mandated prior clearance for investments from countries with which it shares a land border.
