The FIPB has consented to some of the rigid norms proposed by the Ministry of Health for multinational pharmaceutical companies trying to acquire the Indian firms. The conditions that have been accepted by the FIPB include that the foreign company must seek approval before curtailing or discontinuing production of any active ingredient or formulation part of the national list of essential medicines. Manufacturing facility must be used for supply of medicines to the domestic tariff area as during the financial year preceding the year of acquisition. An acquirer must increase production of generic medicines and make them available for domestic use before export. Besides, acquired company should go for value addition and new products, and meet commitment to create jobs.

However, the FIPB did not accept the condition that stated that an acquirer must bring new technology and invest in research so that molecules were developed keeping Indian conditions in mind and a compliance-monitoring mechanism must be set up.

The proposals where the ministry's proposed conditions have been accepted and the requests cleared included the 100 per cent acquisition of Bangalore-based Pharmaceutical Ingredients and Formulations India by US company Levomed Inc and a proposal of US based Akorn Inc to acquire 100 per cent stake in Akorn India. The third proposal was of Edict Pharmaceuticals, in which the existing shareholders proposed to sell 100 per cent stake to Par Pharmaceuticals of the US.

During the month, the Central Government, on the recommendations of the FIPB cleared 20 FDI proposals worth Rs1,034.371 crore. The proposals include that of Canali and Timex Garment for single brand retailing. Both Canali and Timex Garments have proposed to set up a JV for venturing into single brand retail. Among the other proposals include the Interactive Brokers' plan to set a commodity broking business. Pharmaceutical Ingredients and Formulation's proposal to make brownfield investment and Amazon Asia Pacific's proposed venture of entering the online market place were also given a go-ahead.

The FIPB deferred 15 proposals which included Ashok Leyland Defence Systems' proposed venture to undertake defence related activities, Heinemann Asia Pacific proposal for setting up duty-free shops at Indian International airports. Among the rejected proposals were UE Trade Corporation, Shriprop Housing and Shriram Properties' proposal to transfer shares by foreign investors.

FDI sinks in December 2011

FDI inflows in the country slipped to about 33 per cent to $1.35 billion (approx Rs7,124 crore) in December 2011 as against to $2.01 billion (approx Rs9,094 crore) FDI of December 2010.

On a cumulative basis, during April-December, FDI surged to 51 per cent with $24.18 billion (approx Rs1,20,900 crore) from $16.03 billion (approx 80,150 crore) of the same period last year. The sectors that have received large foreign inflows during the nine month period this fiscal are: Services sector ($4.57 billion (approx Rs22,850 crore)), Pharmaceuticals ($3.19 billion (15,950 crore)), Telecom ($1.98 billion (Rs9,900)), Construction ($1.60 billion), Power ($1.44 billion) and Metallurgical industries ($1.49 billion (7,450 crore)). During the period, the top three countries that pumped in highest FDI included Mauritius ($8.24 billion (approx Rs41,200 crore), Singapore ($3.99 billion (19,950 crore)) and, Japan ($2.68 billion (Rs13,400 crore).

As per the industry experts, FDI in the 2011-12 is expected to cross $30 billion (approx Rs1,50,000 crore), which will have a positive impact on rupee in the foreign exchange market. However, for this the Central Government has to take efforts to give FDI a further fillip. Meanwhile, the government is in the process of evolving a consensus on allowing 51 per cent FDI in the multi-brand retail sector.