Enabling easier inflow of foreign investment in the pharmaceutical sector, the Centre has allowed 74 per cent FDI under the automatic route in existing (brownfield) projects. Any investment beyond that will require government approval.

The Centre had already eased the rules for investment in greenfield pharma projects, where 100 per cent FDI is permitted under the automatic route.

Earlier, while 100 per cent FDI was allowed for brownfield pharmaceutical investment, it required government approval.

“The pharmaceutical sector has been witnessing heightened activity in recent years and this change should help in reducing the timelines for deals involving FDI of less than 74 per cent equity stake,” said Kalpesh Maroo, Partner at consultancy firm BMR & Associates LLP.

The domestic industry also hailed the move. “FDI will favourably impact the Indian pharmaceutical industry by providing access to more capital/funds for investing in research and development, which in turn leads to the creation of more IPR,” said DS Rawat, Secretary General of industry body Assocham. Experts also said the reforms make India the most liberal destination in terms of foreign investment rules for the global pharmaceutical industry.

Kiran Mazumdar Shaw, Chairperson and Managing Director of Biocon, said the move has been long awaited.

“Automatic approval route for FDI in pharmaceutical is a welcome and long awaited policy announcement for a sector that is highly capital intensive,” she tweeted from her official Twitter handle.

Analysts also see the move as one that will boost the inflow of foreign capital in the country.

“These reforms, formal notification of which is awaited through the issuance of requisite press notes by the Department of Industrial Policy and Promotion, will undoubtedly promote the inflow of FDI into the country in manufacturing, services as well as trading,” said Radhika Jain, Director at Grant Thornton Advisory.

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