However, pharma sector needs more strategic thinking to encourage investments rather than just opening up FDI route, FICCI says.
The pharmaceutical sector needs strategic thinking behind encouraging investments, and not just simply opening up FDI, said the industry body FICCI after the centre announced 74% FDI in the sector, Monday. The move came along with a series of reforms in other sectors, as the government allowed up to 100% FDI in defence and aviation, calling India "now the most open economy in the world for FDI".
The pharmaceutical sector already had 100% FDI allowed in greenfield investments, which are investment in new plants, through the automatic route that requires no government approval. It had 100% FDI in brownfield -- investments via mergers and acquisitions -- with government approval. Today's announcement changes the rules for brownfield investments, opening up industries to 74% FDI through the automatic route.
Shobha Mishra Ghosh, senior director FICCI, told dna that despite this there had been almost no greenfield investments and all FDI was through brownfield. There, too, there was a lack of impact on research and development (R&D) and in quality transfer to Indian companies. She said more than announcing new limits for FDI, the government needed to implement "strategic thinking" to get incentivise investors towards technology transfer, new molecule development, both of which are needed in the Indian industry.
"The industry will welcome investments in pharma but we need to focus on R&D and biotechnology,"said Ghosh.
FDI should ideally help India's crucial generics industry, as it should up its production capabilities, allowing the country to produce more generics. However, innovation, drug discovery, quality and the know-how of the country's human resources is also important.
As Ficci officials pointed out, Indian companies have been hauled up by the WHO and the US FDA for lack of quality in their drugs. Increased FDI should help bring in know-how and quality to the companies here, if investors are given proper incentives to invest in the area.
"We've stopped manufacturing APIs (Active Pharmaceutical Ingredients,"said Ghosh, "as it's cheaper to import them from China. China is breathing down our necks in drug discovery."
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Representational Image")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}