The Indian pharmaceutical industry has received almost Rs 2141 crore investment through Foreign Direct Investment (FDI) in the last two financial years, with most of the fund infusion directed to healthcare and biotech ventures. Out of the total investment, almost 82 per cent of the FDI in pharma sector was from five countries - Mauritius, Singapore, USA, UAE and Canada.

According to the latest report of the Department of Pharmaceuticals, the pharma industry in the country has attracted investment from 36 countries in a period between April 2007 and April 2009, to an amount of Rs 2140.90 crore-fund infusion.

The FDI from Mauritius in the two financial years was Rs 1206.50 crore, accounting to 56.36 per cent of the total foreign investment even as fund inflow from Singapore was Rs 239.43 crore for the period. USA firms invested Rs 124.30 crore in Indian drugs and pharmaceutical sector while the fund infusion of UAE, Canada and the rest of the countries were Rs 101.33 crore, Rs 85.71 crore and Rs 383.62 crore respectively.

Further, the figures show that while 208 foreign collaborators joined hands with Indian pharma industry for projects in the period, the major investments were flown in from Mauritius. The top 10 foreign collaborators contributed 48.70 per cent of the total foreign direct investment, out of which seven collaborators were from Mauritius and one each from Singapore, UAE and USA.

Considering the global trend, there is no wonder for most of the fund inflow originates from Mauritius and Singapore, says industry sources. The tax benefits offered by the governments in Mauritius and Singapore have attracted many funding agencies to open their office in these countries. Though many of them have their offices and operations in other nations, the base of the firm will be in these countries, which in turn will help them to enjoy the tax benefits, said Vikram Gupta, chief operating officer, IndiaVenture Advisors Pvt Ltd, the venture capital firm under the Piramal Group.

"When we look at the global funding sources, almost 80 per cent of them have their base in Mauritius and another 10 per cent at Singapore. In a bigger picture, the foreign investors are looking at opportunities to invest in biotech ventures and new areas like clinical research and even R&D ventures in India at present," he added.

According to the regulations, FDI up to 100 per cent is permitted on the automatic route for manufacture of drugs and pharmaceutical, provided the activity does not attract compulsory licensing or involve use of recombinant DNA technology, and specific cell or tissue targeted formulations. FDI proposals for the manufacture of licensable drugs and pharmaceuticals and bulk drugs produced by recombinant DNA technology, and specific cell or tissue targeted formulations will require prior Government approval.