The Department of Industrial Policies and Promotions (DIPP) is set to decide on 49 per cent foreign direct investment for brownfield projects in pharmaceutical projects either through automatic route or approval route.

A decision will be taken before August 24.

A senior DIPP official said, “The Commerce Ministry will finalise it before the next FIPB meeting scheduled for August 24. Such a move will help in clearing pending proposals for FDI related to the pharma sector.”

The FIPB has been deferring proposals related with Pharmaceutical and Health & Family Welfare.

In its last meeting on July 27, it deferred eight proposals.

The PMO had recently sought a status report on the FDI policy in the sector.

The PMO was worried over the continued delay in the formulation of a new document.

The issue of relaxing FDI norms in the pharmaceutical sector has been pending for long because of differences between the Finance Ministry and DIPP.

The inter-Ministerial Expert Group was formed by the Finance Ministry to decide on FDI.

The Group is headed by Shaktikanta Das, Additional Secretary in Department of Economic Affairs. The other representatives are from DIPP, Health, External Affairs and Overseas Indian Affairs Ministries.

The Finance Ministry favours capping FDI in the pharmaceutical sector at 49 per cent in existing units, whereas the DIPP has been supporting 100 per cent FDI through the FIPB route.

In November 2011, the Government had revised the policy to ensure that the sector was not controlled by foreign companies thereby denying availability of cheaper drugs in the domestic market.

After a series of acquisitions, it changed the 10-year old policy of automatic clearance, to address the Health Ministry’s concerns.

Some major acquisitions included Japan’s Daiichi Sankyo buying Ranbaxy Laboratories, Sanofi Aventis (France) buying Shanta Biotech and Abbott Laboratories of the US acquiring Piramal Health Care’s health unit.

> shishir.sinha@thehindu.co.in