In a bid to take a final view on relaxing FDI norms in the pharma sector, Prime Minister Manmohan Singh is likely to soon call a meeting of senior ministers, including Finance Minister P Chidambaram and Commerce and Industry Minister Anand Sharma.
New Delhi: In a bid to take a final view on relaxing FDI norms in the pharma sector, Prime Minister Manmohan Singh is likely to soon call a meeting of senior ministers, including Finance Minister P Chidambaram and Commerce and Industry Minister Anand Sharma.
Differences, mainly between the finance and the commerce and industry ministries, on how much FDI in existing domestic units must be approved by the Foreign Investment Promotion Board (FIPB, had led to a delay in relaxation of norms.
"The Prime Minister is likely to again meet the concerned ministers regarding finalisation of FDI policy," an official said.
The development comes in the wake of the Department of Industrial Policy and Promotion (DIPP) finalising guidelines after being asked by an inter-ministerial group headed by Additional Secretary in DEA Shaktikanta Das.
"DIPP has sent the final guidelines to the PMO. However, differences still persists on the issue of involvement of Competition Commission of India (CCI) in scrutinisation of mergers and acquisitions of Indian drug companies," the official said.
In October 2011, a ministerial group headed by Prime Minister Manmohan Singh had put foreign investment in brownfield pharma on approval route, changing a 10-year old policy of automatic clearance.
Under it, for any merger or acquisition, the overseas investor will have to seek permission from FIPB. After six months, monopoly watchdog CCI will vet such deals.
However, 100 per cent FDI under automatic route is allowed in new projects.
The issue of FDI in existing Indian pharma companies started attracting government's attention after some foreign firms acquired big Indian companies such as Ranbaxy by Daiichi Sankyo of Japan, Shanta Biotech by Sanofi Aventis of France and Piramal Health Care's health unit by Abbott Laboratories of the US.
While the finance ministry wants that only those cases involving FDI beyond 49 percent in existing units should be considered by FIPB, the DIPP wants any foreign investment in existing pharma units to be approved by the FIPB.
"The health ministry is also in line with the DIPP," the official said.
According to sources, DIPP and health ministry have also insisted that foreign companies acquiring Indian firms must seek government approval if they decide to reduce or stop manufacturing of essential drugs by the acquired entity.
Besides, the two ministries want that MNCs acquiring Indian firms should not cut production of generic drugs under any circumstances and must also ensure availability of those medicines in the domestic market before exporting.
The DIPP and health ministry raised concerns over certain conditions under the new norm that led to a delay in clearance of many proposals.