At a meeting chaired by Prime Minister Narendra Modi, the government has made changes to the FDI policy in pharmaceutical sector with the objective of providing major impetus to employment and job creation in India.

With the objective of promoting the development of this sector, it has been decided to permit up to 74 per cent FDI under automatic route in brownfield pharmaceuticals and government approval route beyond 74 per cent will continue.

The extant FDI policy on pharmaceutical sector provides for 100 per cent FDI under automatic route in greenfield pharma and FDI up to 100 per cent under government approval in brownfield pharma.

This is the second major reform after the last radical changes announced in November 2015. According to the government release, amendments to the FDI Policy are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country leading to larger FDI inflows contributing to growth of investment, incomes and employment.