Indian pharmaceutical sector has witnessed increased foreign investment in the form of strategic collaborations, mergers and acquisitions as per available information from different sources. Foreign Direct Investment in the pharmaceutical sector was allowed upto 100% on the automatic route till November, 2011, when government reviewed the policy in view of the pattern of foreign investment. As a result of the review, Foreign Direct Investment in existing entities (brownfield) in the pharma sector was put on the government approval route for the necessary scrutiny. Further, in order to ensure availability of essential medicines and maintain a reasonable level of research and development expenditure, government prescribed appropriate conditionalities for approvals under the government approval route.

The extant policy on Foreign Direct Investment (FDI) in the pharmaceutical sector is at Annexure-I. It is expected that Foreign Direct Investment should strengthen the domestic pharmaceutical sector by augmenting the availability of capital and technology for production, marketing, research & development. This should in turn positively impact the availability of lifesaving drugs in the country through enhanced production as well as introduction of new drugs.

Annexure-I

ANNEXURE REFERRED TO IN REPLY TO LOK SABHA UNSTARRED QUESTION NO. 174 FOR ANSWER ON 5.8.2013.

Sl. No.	Sector/Activity	% of FDI Cap/Equity	Entry Route
6.2.18	Pharmaceuticals
6.2.18.1	Greenfield	100%	Automatic
6.2.18.2	Brownfield	100%	Government
	Note:Government may incorporate appropriate conditions for FDI in brownfield cases, at the time of granting approval.

Major cases of such FDI are placed at annexure – II

Click here to see Annexure

The information was given by the Minister of Commerce & Industry, Shri Anand Sharma, in a written reply in the Lok Sabha.

FDI in pharmaceuticals: 100% allowed; greenfield automatic, brownfield subject to government approval with conditions. FDI up to 100% is permitted in pharmaceuticals: Greenfield projects are allowed via the automatic route, while Brownfield/existing entities are routed through government approval, with the government empowered to impose conditions to protect availability of essential medicines and ensure reasonable research and development expenditure.