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The Foreign direct investment (FDI) equity inflow into the drugs and pharmaceuticals sector in the country has hit a five year-low at $891 million during the 12 month ended March 31, 2025. The foreign equity inflow during the year was a 16% decline from the $1.06 billion reported during the previous fiscal year.
According to data from the Ministry of Commerce and Industry, the FDI inflow into the sector has seen a decline in the second consecutive year, after reaching a peak of $2.06 billion in 2022-23, which was a 46% growth compared to the $1.41 billion in 2021-22. In the year 2023-24, this declined almost 48.3% to $1.06 billion.
This is for the first time in the last five years, the inflow has declined to below $1 billion. It may be noted that in 2020-21, the fund inflow was at $1.49 billion, which declined to $1.41 billion in 2021-22.
In rupee terms, the FDI inflow during 2024-25 was at Rs. 7,500 crore, as compared to Rs. 8,844 crore during the previous fiscal year, reporting a 15.2% decline.
During the quarter ended March 31, 2025, the fund inflow reported almost 40 per cent decline to $91 million as compared to the $151 million in the same period last year. In rupee terms, the inflow was 36.5% down at Rs. 795 crore during the quarter as against Rs. 1,252 crore in the corresponding quarter of previous fiscal year.
The cumulative foreign equity infusion into drugs and pharmaceuticals sector from April 2000 to March, 2025 is $23.42 billion, which is 3.21 per cent of the total FDI inflow into the country during the period.
Out of the total FDI equity inflow of $729 billion reported in the country till the end of March, 2025, services sector accounted to over 16.3 per cent, followed by computers and software & hardware (15.19%), Trading (6.53%), telecommunications (5.5%), automobile industry (5.19%), construction (infrastructure) activities (4.96%), construction development including townships, housing, built up infrastructure and construction development projects (3.72%), drugs and pharmaceuticals (3.21%), chemicals (other than fertilizers) (3.18%), and non-conventional energy (3%) between April, 2000 to March, 2025.
As reported earlier, the FDI inflow has seen a decline of 12.38 per cent during the first nine months of the fiscal year 2024-25, from April to December 2024 stood at $800 million, as compared to $913 million during the same period of previous fiscal year.
The quarter ended December, 2024 reported an equity inflow of $280 million, almost 65 per cent lower compared to the $796 million foreign direct investments reported during the same quarter of previous fiscal year.
Interestingly, the FDI inflow in the first half of the FY25 was at $520 million, which was a multifold growth compared to the $117 million equity investment reported in the same period last year.
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 the 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.
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