The Department of Pharmaceuticals (DoP) under the Ministry Of Chemicals and Fertilisers has proposed that the government set up an expert group to assess the impact of Foreign Direct Investment (FDI) in pharma sector. DoP's proposal comes after a suggestion by the National Security Council (NSC) that the Foreign Investment Promotion Board (FIPB) put the sector on a "sensitive list" requiring approval.

The move follows complaints from Indian companies that they were being forced to sell out to foreign companies for lack of long-term funding for R&D and market development.

Currently, FDI up to 100 per cent is allowed in the drugs and pharmaceuticals on the automatic route.

The department was responding to a note prepared by the NSC in February for the 20-member Committee of Secretaries (CoS) set up to suggest changes in FDI policy in sectors that involve security concerns. Cabinet Secretary K M Chandrasekhar heads the CoS.

In its letter to the NSC, the DoP said it had already raised concerns with the Commerce Ministry that acquisitions of Indian companies in this sector could increase, and this trend would affect the pricing and availability of medicines in India. The DoP has proposed that the recommendations could be placed before the Prime Minister's Economic Advisory Council or any other competent authority.