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Govt may review FDI policy in pharma,housing tomorrow

India is demanding an amendment to the Agreement in Agriculture of WTO in order to implement its food security law.

November 27, 2013 / 09:55 PM IST

The Cabinet is likely to take a decision tomorrow on relaxing FDI norms for the housing sector and reducing foreign investment limit to 49 percent in rare and critical areas of the pharma segment. The Cabinet would also deliberate on the stand to be taken by India in the forthcoming WTO meet in Bali between December 3-6.


"All the three issues are there in the Cabinet's agenda. The matters were listed in Monday's meeting but was deferred," an official said. According to media reports, negotiators in Geneva, (the WTO headquarter) failed to sort out differences yesterday on issues like trade facilitation and food security ahead of the Ministerial Conference in Bali.


Also read: India emerges most attractive investment destination: EY


India is demanding an amendment to the Agreement in Agriculture of WTO in order to implement its food security law. The US and EU are opposing any such amendment. On FDI in pharmaceuticals, several departments, including the DIPP, have raised serious concerns over continuous acquisitions of Indian drug makers by global multinational firms.


The Department of Industrial Policy and Promotion (DIPP) has proposed to reduce FDI cap from 100 percent to 49 percent in the "rare or critical pharma verticals". According to sources, three categories have been proposed to define "rare or critical". It includes companies with five or more manufacturing units, and companies with 40 percent or more market share irrespective of the total number of manufacturing facilities.


"If an entity manufactures multiple products, it will be treated as critical if either of the above two conditions are satisfied for at least one third of the products," said a source.


The DIPP has also proposed incorporating conditions for foreign firms like mandatory investment in R&D and non-compete clause in the shareholders pact. India at present permits 100 percent FDI in the  pharma sector through automatic approval route in the new projects, but the foreign investment in existing pharma companies are allowed only through FIPB's approval.

Regarding FDI in the housing sector, DIPP has proposed relaxing FDI norms including easing conditions for exit before the three-year lock-in period. It has proposed easing conditions for exit of foreign players before the three-year lock-in period.

first published: Nov 27, 2013 09:55 pm

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