DIPP Directs FIPB To Pause Clearance To FDI Proposals In Pharma Sector

It is said that DIPP was reviewing the FDI policy for the sector and all proposals cleared at the last meeting of the board are asked to be deferred. The DIPP has been unhappy with the mass approvals that the FIPB has given a nod to. Out of the 60 applications for FDI in brown-field pharmaceutical projects, 58 have been approved by the board. This is after the government has stopped the automatic route of approval in 2012.

The DIPP has shown concerns over FIPB giving a green signal to almost all proposals made by foreign companies. This shows that no attempt is being made to judge how these would affect the availability of drugs in the country. It seems that the FIPB is not using its discretionary powers at all. The main concern that the DIPP has raised is that of these approvals leading to the availability of cheap generic drugs.

This is certainly a dampener to the sector. This move has come after Prime Minister Dr Manmohan Singh himself endorsed policy changes to ensure that big acquisitions of domestic drug companies by multinationals did not deny cheap drugs to Indians. Four FDI proposals cleared in the last FIPB meet including those of Mylan Laboratories and Medreich face uncertain fate now as the DIPP review could throw up new issues.