FDI in pharmaceutical to pass through filter

NEW DELHI: The government on Monday decided to put a filter into foreign direct investment in the pharmaceutical sector following concerns that drug prices will rise in the backdrop of several domestic firms being taken over by the multi-national companies.

"Yes, there will be filters...," Planning Commission Member Arun Maira said after Prime Minister Manmohan Singh held a meeting with his Cabinet colleagues on the issue. He said the decision would come into effect immediately.

However, no cap will be introduced on FDI which will remain at 100 per cent.

"It was a good meeting. Whatever the high level committee had recommended...has been accepted," he said, adding for six months, FDI proposals for mergers and acquisitions would be routed through the Foreign Investment Promotion Board (FIPB).

In the meantime, the monopoly watchdog, Competition Commission of India ( CCI) will be strengthened so that it develops the capacity to vet such deals.

Maira said the committee headed by him had also suggested having CCI filters. "Everybody agreed CCI is the right forum but that needs to be strengthened. Meanwhile FIBP will look into...," he said.

Today's meeting was attended by Finance Minister Pranab Mukherjee, Health Minister Ghulam Nabi Azad, Commerce and Industry Minister Anand Sharma and Chemicals and Fertiliser Minister M K Alagiri. Planning Commission Deputy Chairman Montek Singh Ahluwalia was also present.

Home-grown firms acquired recently by multi-national firms included Ranbaxy Laboratories by Daiichi Sankyo of Japan, Shanta Biotech by Sanofi Aventis of France and Piramal Health Care by Abbott Laboratories of US.