India to permit 100% FDI in pharma sector

India has removed the 74% cap on foreign direct investment in localpharmaceutical companies, allowing foreign firms generally to make direct investments of up to 100% automatically. This removes a major bureaucratic burden in getting FDI approvals from government ministries and departments and the Foreign Investment Promotion Board, reports the Marketletter's New Delhi correspondent, Ajoy Sen.

The government has also withdrawn the stipulation that foreign firms may invest up to 100% in certain specified areas only if they disinvest 26% within five years in favor of a locally-owned company. The changes do not apply to the 76 licensed drugs and bulk pharmaceuticals produced in India via recombinant DNA technology.

Industry spokesmen were guardedly optimistic over the news. R D Joshi, secretary general of the Organisation of Pharmaceutical Producers of India, told the Marketletter that this was an incentive, but he did not expect any dramatic effect until India's foreign-product patent regime is finally in operation in 2005.