FDI proposals of some pharma MNCs may get nod

NEW DELHI: The pending proposals by multinational drug makers to buy into Indian pharma companies will be cleared soon, with the department of pharmaceuticals approaching the Foreign Investment Promotion Board for case-to-case clearances until finalisation of new norms.

The department has asked the finance ministry to revisit all pending cases at the next meeting of the FIPB, which is scheduled for July 20, and decide on a case-to-case basis.

Some of the pending proposals include Mauritius-based Ambrose's plan to buy 40% stake in Sutures India for Rs 199 crore and Spain-based Chemo Group's offer to buy out Ordain Healthcare Global for Rs 58 crore. Decision is also awaited on the investment plans of Mitsui & Co and B Braun.

"We cannot be indefinitely delaying decisions. It also gives a wrong signal to investors," an official told ET.

The FIPB, which falls under the finance ministry, has been postponing a decision on the applications of several MNCs due to the lack of clarity on policy regarding foreign investment in brownfield projects in the sector. According to official estimates, brownfield FDI proposals worth Rs 3,000 crore are pending.

The inter-ministerial group set up to frame the guidelines for stake buys by MNCs has not been able to finish its task due to differences among its members. It has already missed its June 30 deadline.

The FIPB can examine the pending applications and check whether such investments would impact the availability of generic drugs in the country. Some of these applications pertain to small deals, the official said.

While the department of pharmaceuticals has been pushing for a liberal FDI regime, the health ministry has been insisting on strict stipulations, such as maintaining the level of generic drug production after acquisition, transfer of technology and increasing investment for research on diseases prevalent in India.

The conditions are being imposed to address concerns that drug prices could rise sharply if foreign firms come to dominate the Indian pharma sector.