In an attempt to boost the foreign direct investment in the country's biotechnology sector, the Central Government is all set to make some key changes in the existing FDI and licensing norms. The Departments of Finance and Industry is currently working on a proposal submitted by the department of biotechnology to allow 100 per cent foreign direct investment in the biotechnology sector through automatic route.

Revealing this progressive move in the biotechnology investment area, Arvind Duggal, director, Department of Biotechnology, said that the draft law was already prepared and had been forwarded to ministry of finance and ministry of industries. "Both the ministries have agreed to the proposal in principle and the final draft would be prepared soon for the cabinet approval," he said.

Making the foreign direct investment through automatic route, the investment flow to this promising sector can be made hassle free and the bulk number of applications already lying with the Foreign Investment Promotion Board can be cleared fast, he said. "This has been the demand from the industry for the last few years as many foreign companies and investors have showed interest in investing in biotechnology ventures in India," he added.

Though 100 per cent FDI is currently allowed in the biotechnology sector, it should be only through FIPB as per the existing foreign investment norm in India. So the proposed change is expected to push the investment in the sector multifold. Currently, the total investment in the Indian biotechnology sector is about $700 million and by 2006 end it is expected to grow to the $1 billion mark with the desired changes in the FDI norms, Duggal said.

Along with the changes in the FDI norms, the government is also proposing to abolish licensing requirements for setting up biotechnology units in the area of recombinant proteins. The recommendation for delicensing this sector has also been included in the DBT's draft proposal to the Industry ministry and the other ministries concerned. However, the entrepreneurs would be required to declare the nature of business with the Industrial Entrepreneurship Memorandum (IEM) for the information of Department of Biotechnology. "Though the delicensing gives freedom for the entrepreneur to start up the venture, the activities will be monitored by the Department. However, by delicensing the sector, we expect self discipline from the industry," Duggal said.