FDI in Brownfield pharma sector has been permitted upto 74% under automatic route; and FDI beyond 74% and upto 100% is allowed under Government approval route. The move to permit 74% FDI under automatic route in Brownfield pharmaceutical sector is aimed at attracting required capital, international best practices and latest technologies in the sector. Further, 100% FDI under automatic route is permitted for Greenfield pharma sector.

The Government while reviewing FDI policy on pharma sector has put in place necessary safeguards by providing that non-compete clause would not be permitted. This will enable Indian promoters to operate in the same line of business in new ventures. Further, to ensure domestic availability of essential medicines and drugs; and to maintain deployment of adequate capital in R&D, extant FDI policy on the sector mandates specified level of production of National List of Essential Medicine drugs and extent of R&D expenditure to be maintained by the investee company.

Both Greenfield and Brownfield investments are in line with the initiative of ‘Make in India’ and thus there is no proposal under consideration of Government to restrict such investments only to Greenfield project.

This information was given by the Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman in a written reply in Rajya Sabha today.

Foreign direct investment limits in pharmaceuticals expanded, enabling greater automatic-route and government-route participation while protecting local production and R&D. The government expanded foreign investment permissions in the pharmaceutical sector by permitting increased FDI under the automatic route for Brownfield projects, with additional investment beyond that threshold allowed under government approval; 100% automatic FDI remains for Greenfield projects. The policy prohibits non-compete clauses, requires specified production of drugs on the National List of Essential Medicines, and mandates a defined level of R&D expenditure by investee companies to ensure domestic availability and continued capital deployment in research.