Panel may cap pharma sector FDI through automatic route at 49 per cent

The inter-ministerial expert group, set up by the finance ministry to decide on foreign direct Investment (FDI) in pharmaceutical sector, will meet on Tuesday to give final touches to its suggestions.

The panel among other things will discuss government role in guiding foreign direct investment (FDI) in pharmaceutical sector and retaining a cap of 49 per cent FDI in pharma sector through the automatic route.

The expert group headed by Shaktikanta Das, additional secretary in the Department of Economic Affairs, will hold consultations before finalising its report for submission to the finance ministry for further action.

The issue of foreign direct investment in pharmaceutical units has been a controversial topic with the ministry of commerce and industry and the ministry of health and family welfare at loggerheads over the norms for allowing FDI.

The issue of acquisition and mergers of domestic companies by leading multinational drug firms has been a sore point while discussing the need to ensure availability of cheap drugs.

It is likely that the expert group may suggest a 49 per cent cap on FDI threshold, triggering government intervention to decide on acquisition beyond the limit, or in case of mergers. These would then be routed through the Foreign Investment Promotion Board (FIPB).