The Foreign Direct Investment (FDI) in pharmaceutical sector jumped by 86.42% from US $ 580.32 million during April-October 2012 to US $ 1081.81 million during the corresponding period April-October, 2013. Out of this, FDI inflow under FIPB approval/ acquisition route during the period April-October, 2012 and April-October, 2013 is US$ 134.62 Million and US$ 1073.67 Million respectively. A statement indicating FDI inflows during the said period is annexed.

The extant FDI policy in the pharmaceutical sector allows 100% FDI on the automatic route for greenfield investment. 100% FDI is allowed for brownfield investment on the government approval route. In order to ensure availability and affordability of essential medicines and to maintain a reasonable level of research and development expenditure, government has prescribed appropriate conditionalities for approvals under the government approval route. Further, with a view to protecting the domestic pharmaceutical sector, including the production of generics, the Government has decided that ‘non-compete’ clause would not be allowed except in special circumstances with the approval of the Foreign Investment Promotion Board. Government has also put in place mechanisms like the Drug Price Control Order and the National Pharmaceutical Pricing Authority to address the issue of affordability and availability of medicines.

STATEMENT REFERRED TO IN REPLY TO PART (a) OF RAJYA SABHA UNSTARRED QUESTION NO. 2183 FOR ANSWER ON 12.02.2014 REGARDING INCREASE IN FDI IN PHARMACEUTICAL SECTOR

FINANCIAL YEAR WISE FDI EQUITY INFLOWS
Sector: DRUGS & PHARMACEUTICALS 

                                                                                                                                                             Amount of FDI (US$ million)

The information was given by the Minister of State in the Ministry of Commerce and Industry Dr. E.M. Sudarsana Natchiappan in Rajya Sabha today.

FDI policy in pharmaceuticals limits non compete clauses and ties brownfield approvals to public health conditionalities and pricing safeguards. FDI policy permits 100% FDI on the automatic route for greenfield projects and 100% for brownfield projects under the government approval route subject to conditionalities to ensure medicine availability and R&D. Non compete clauses are disallowed except in special cases with Foreign Investment Promotion Board approval. Drug Price Control Order and the National Pharmaceutical Pricing Authority are cited as mechanisms to safeguard affordability and availability.