Foreign Investment Promotion Board defers pharmaceuticals sector FDI proposals

NEW DELHI: The approval authority on Friday deferred all foreign investment proposals in the pharmaceuticals sector, dashing foreign firms' hopes that their applications may finally be cleared after a government panel finalised new FDI norms three days ago.

The Foreign Investment Promotion Board in its meeting on Friday decided to put off FDI proposals after a department of industrial policy and promotion representative told the board that commerce minister Anand Sharma has sought the same, a government official said.

"This is a strange because the guidelines were finalised with DIPP's consent and FDI proposals in the pharmaceuticals sector are being cleared by FIPB, as sought by DIPP," the person said, adding that this was sending a wrong signal to foreign investors. An inter-ministerial panel had finalised guidelines for the pharmaceuticals industry on Tuesday-a move that was expected to clear the way for more than 3,000-crore worth of FDI proposals stuck due to lack of clarity on the guidelines.

The new guidelines are awaiting approval of the Prime Minister's Office.

The panel suggested conditions such as commitment by the buyer to manufacture and make available essential drugs post acquisition for five years and also to increase R&D expenditure by 5% for diseases prevalent in India to allow foreign firms buy Indian companies.

It left it to DIPP to decide if the riders be imposed for acquisition of more than 49% or management control.

An industry official said DIPP was yet to finalise its views on issues such as threshold limit and that could be the reason for putting off the proposals.