Planning Commission said on Monday there is no move 'anywhere' to restrict foreign investment in pharmaceutical even as an expert group is looking into the specific issues related with foreign direct investment into the sector.
"I don't think there is any move anywhere to prevent the expansion of existing 100 per cent foreign-owned pharmaceutical companies or to prevent green field investment by foreign companies," Planning Commission Deputy Chairman Montek Singh Ahluwalia said at the India-US High Technology Cooperation meeting.
Currently 100 per cent FDI is allowed in the sector.
He was answering a question on whether the government was mulling restricting FDI in pharmaceutical sector.
There are fears that acquisition of domestic pharma companies by MNCs will lead to drug price escalation.
Ahluwalia said due to this apprehension an expert group has been constituted under Planning Commission member Arun Maira to look into the issue.
". . .(the expert group would see whether) there is any problem or should there be any restriction relating to merger and acquisition rules for existing Indian pharma companies," he said.
Domestic pharma companies, spearheaded by the Indian Drug Manufacturers Association and Indian Pharmaceutical Alliance, had raised concerns that the takeover of Indian companies by foreign firms could lead to a situation of over-pricing of drugs and marginalisation of homegrown firms.
In 2008, Japan's Daiichi Sankyo acquired a majority stake in Ranbaxy Laboratories, while Abbott Laboratories acquired Piramal Healthcare's domestic formulations business last year.
The Department of Industrial Policy and Promotion, a nodal agency responsible for FDI-related matters, had also raised concerns over the growing dominance of multinationals in the sector.
Meanwhile, speaking on poverty at an CUTS event earlier in the day, Ahluwalia said 'nobody denies that the poverty is very high. It is governments view that the percentage of poor (people living Below Poverty Line) has not fallen as fast as we would like to'.
He also said that there is a need to broaden the debate beyond the numbers.
Suggesting ways to to deal with poverty, former Finance Secretary Ashok Chawla said: "We need more resources to deal with poverty. We need to increase our tax-GDP ratio which is currently hovering at around 10-11 per cent through broad-base taxation
Ahluwalia also called for a deepening of ties between the corporate sector in India and the US and said the commercial relationship between the two nations is an important component of India's economic growth.
He said the country will have an average growth of 8.2 per cent during the current five-year plan period ending 2011-12.
"It is less than the 9 per cent we targeted while formulating the Plan but given the global economic crisis and the consequent setbacks, this speaks of the basic innate dynamism of the Indian economy," Ahluwalia said adding the growth has been led by the private sector.
He further added that the country is targeting a 9 per cent growth during the 12th Plan (2012-17) and for this the focus on energy security, infrastructure and higher technology would be greater.
Ahluwalia said the Indo-US commercial ties have the potential to benefit from this.
Regarding concerns about intellectual property rights, the Planning Commision chief said the country is committed to rules on IPR.
"India is firmly committed to meet World Trade Organisation obligations under the IPR regime," he said.
He also asked smaller American firms to invest more in the Indian market and said the defence sector would be one area where such companies can fill some important gaps.
To a query on corporate farming, Ahluwalia said the system is unlikely to be acceptable.
"Corporate farming. . .I don't think that will be acceptable. I don't think we need corporate farming for higher percentage of growth in agriculture. We need much more contract farming. We need modernisation of the marketing system.
"There are many things we can do that will bring in private farming to the whole chain from the farmer to the consumer. You don't actually need corporate farming for that," he told reporters on the sidelines of the event.
The Plan panel is targeting a 4 per cent growth in agriculture during the 12th Plan as part of the aim to achieve 9 per cent overall economic growth during 2012-17.
Ahluwalia also called for the telecom firm to adopt solar technology for operating the telecom towers.
"I know several telecom towers use diesel and diesel at the present moment happen to be underpriced. That undepricing applies to all of diesel. . . I am in favour of, as far as possible, using solar energy for telecom towers. These towers are in all sorts of isolated places.
"If you did that you still could have a diesel back-up," he said.
