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FDI inflow into pharma sector declines 5% in 2021-22

Gireesh Babu, New Delhi
Monday, May 30, 2022, 08:00 Hrs  [IST]

After recording a 200 per cent growth in Foreign Direct Investment (FDI) equity inflow into the sector in the previous year, foreign equity infusion into the drugs and pharmaceutical industry in India has registered a decline of 5.1 per cent during the fiscal 2021-22.

The cumulative inflow into the sector has inched upto $19.41 billion from April 2000 to March 2022, according to data from the Ministry of Commerce and Industry.

The FDI inflow into the drugs and pharmaceuticals sector for the fiscal year ended March 31, 2022 was $1.41 billion as compared to $1.49 billion inflow reported during the previous fiscal year of 2020-21.

The period from April 2020 to March 2021 has reported an FDI flow of $1.49 billion into the drugs and pharmaceutical industry, as against $518 million reported in the previous fiscal year of 2019-20.

The Economic Survey for the year 2021-22 has recognised this growth, stating that the FDI in the pharmaceutical sector has seen a sudden spurt in 2020-21 vis a vis the previous year showing a 200 per cent increase.

"The extraordinary growth of foreign investments in the pharma sector is mainly on account of investments to meet Covid-19 related demands for therapeutics and vaccines,” it said.

However, with the country managed the third wave of the pandemic better with lesser severe cases, the foreign equity infusion has also seen a decline during 2021-22.

FDI in pharmaceutical is one of the top ten attractive sectors for foreign investment in India, accounting to around 3.3 per cent of the total FDI inflow. Foreign investments in pharmaceuticals in greenfield projects are allowed up to 100 per cent under the automatic route and for brownfield pharmaceutical projects, foreign investment beyond 74 per cent to up to 100 per cent, Government approval is required.
After abolition of Foreign Investment Promotion Board (FIPB) in May 2017, the Department of Pharmaceutical (DoP) has been assigned the role to consider the foreign investment proposals under the Government approval route.

Apart from this, the Department considers all FDI proposals of pharmaceutical sector and medical devices sector, according to an announcement in April 17, 2020, wherein investors/ultimate beneficiaries of the proposals are from the countries sharing land border with India.

Till December, 2021, the DoP has approved 10 FDI proposals worth Rs. 7,860 crore inflows under the brownfield pharmaceutical projects during the financial year 2021-22.

An online portal, namely, “FDI linked Compliance Monitoring Portal” has been developed by the department to monitor progress of FDI inflows received by the Indian Companies in the pharmaceutical sector and ensure compliances of FDI linked performance conditions as required under the extant FDI Policy.

The country supplies 62 per cent of the global demand for various vaccines, 40 per cent of the generic market in the US and 25 per cent of all medicine in the UK. India has around 20 per cent market share of generic medicines in terms of volume in the global pharmaceutical sector.

India is the source of 60,000 generic brands across 60 therapeutic categories and manufactures more than 500 different active pharmaceutical ingredients (APIs). The export of generic drugs is one of India's core strengths. The country's pharmaceutical exports stood at around $24 billion in FY 21-22. The industry has granted incentives totaling Rs. 21,940 crore, according to the statistics from the Government of India.


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