With inordinate delays in getting clearances of brownfield pharma projects, from Foreign Investment Promotion Board (FIPB), experts pinpoint that it is bound to have a negative impact on the investment climate in India which is known the world over as a provider of quality medicines at low cost.

Says Sujay Shetty, executive director, PricewaterhouseCoopers Pvt Ltd., "Government allowing 100 per cent Foreign Direct Investment in greenfield projects through the automatic route in the pharma sector is a welcome change but after November 2011, the brownfield investments require the approval of the FIPB, which often comes with conditions. The time taken in the process has acted as a deterrent to foreign  companies and investors to go for investments."

FIPB conditions include the need to maintain production levels for the NLEM at the highest level for three years preceding the FDI.

Echoing similar views K Shivkumar, managing director, Eisai Pharmaceuticals India Pvt Ltd said, "Riders which are a part of the brownfield pharma investment like the need to maintain R&D expenses at the highest level for three years preceding FDI and the need for information on the transfer of technology to the administrative ministries and FIPB is something which the investor will find difficult to implement. Therefore, the government should relook at the policy in order to create a conducive environment for investments and hence in the larger interest of patients."

The Department of Industrial Policy & Promotion (DIPP) had earlier floated a Cabinet note seeking restrictions on foreign direct investment (FDI) in existing pharmaceutical projects in specific areas, such as vaccines, injectibles and oncology medicines.

The DIPP has been keen in placing a check on the acquisition of existing pharmaceutical projects due to the concerning factor that it could seriously affect the country’s capacity to produce low-cost generic drugs. It is also apprehensive that once Indian companies are taken over by foreign companies, there won’t be any effort to develop new low-cost medicines for the poor.

According to RBI data, FDI worth $2.02 billion came into brownfield pharmaceutical between April 2012 and April 2013, while greenfield projects could attract only $87.35 million.