Kriti Jaiswal l 03/01/2014

In spite of the falling rupee, rising inflation and tightening policy controlmeasuresimplanted by the RBI, the Indian market is still attractive to the foreign investors according to a report published by Ernst and Young. The report claims that the Indian markets are better suited for investments, than US and China.

The most lucrative sectors were automotive, technology and life sciences and consumer products. An industry expert was quoted saying that the investor outlook for India remains positive, despite challenges the country’s slowing economy has faced.

But many view the FDI with its good and bad side effects.   The industry experts believe that FDI should be allowed but with regulations. Some even stress and say that “a drugs price is not decided by the multinational company but by the country’s policy.”  Others site China’s example and press upon the need for FDI in the country.

The bad effects of having foreign direct investment in the pharma sector would mean a reduction in the supply of cancer vaccine and other active pharmaceutical ingredients. Also popular generic drugs which are cheaply produced by Indian pharma companies.  These would be the result of foreign companies completely taking over the Indian companies. Foreign Investment anyways would imply looking for greater profits which would mean an increase in drug prices.

Indian companies always function with the objective of welfare motive and also follow the policies and adhere to the regulations laid down by the government. This often enables the production of many cheap drugs which are not only consumed in the Indian markets but also in other developing countries. Hence a large part of the drugs and vaccine produced by the Indian pharma sector is exported, which infers that the Indian pharma sector is not running into losses and is making profit, as there is a great demand for cheaply produced drugs and vaccines.

 The responses are mixed. The FDI question has the negative and positive side.  What the country embraces is yet to be seen and it will unfold in the next few months to come.

 Sources:

http://www.firstpost.com/business/cabinet-may-decide-to-reduce-fdi-in-pharma-to-49-percent-1246141.html   http://www.deccanherald.com/content/215612/with-100-fdi-pharma-medicines.html   http://retail.economictimes.indiatimes.com/news/apparel-fashion/apparel/india-emerges-most-attractive-investment-destination-ernst-young/26306793  http://www.lifescienceworld.in/fdi_in_indian_pharma_sector.html

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