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Brownfield FDI norm hardly helpful in asset building in pharma industry: CIPI
Laxmi Yadav, Mumbai | Saturday, July 30, 2016, 08:00 Hrs  [IST]

Expressing concern over the government decision to allow 74 per cent FDI under automatic route in brownfield pharma projects, the Confederation of Indian Pharmaceutical Industry (CIPI) stated that this does not seem to yield desired objective of promoting investments and asset creation in pharma industry.

With an aim to enhance investment and production capacity, the government has allowed 100 per cent FDI under automatic route in greenfield (new) pharma projects, 74 per cent FDI under automatic route in brownfield pharma and 100 per cent FDI in brownfield pharma under government approval route.

The government decision aimed at making investment process easier has little effect on investment growth and asset creation in pharma sector. Earlier FDI above 49 per cent in brownfield pharma projects would require Foreign Investment Promotion Board (FIPB) approval. Allowing 74 per cent FDI in brownfield pharma under automatic route will benefit promoters of pharma units who can sell their stake to MNCs to make profit. It has nothing to do with patient interest and ensuring affordable medicines to them, said Sudesh Kumar, executive secretary of CIPI.

The key objective of FDI policy in this sector should be to exercise check on large scale acquisition of Indian companies by foreign drug makers and promote investment in the sector which brownfield FDI policy does not yield. India’s high volume domestic market with no price control on patented pharmaceuticals and availability of cheap labour is a big attraction to foreign pharma companies, he said.

CIPI in a meeting with joint secretary of department of pharmaceuticals had raised the concern over FDI under automatic route in brownfield pharma projects as it would not facilitate asset creation and long term growth of Indian pharma.

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