Indian ministry officials have apparently decided that foreign companies may continue to invest in new pharmaceutical industry projects but that foreign proposals for mergers and acquisitions in this sector will have to undergo enhanced scrutiny. Concerns over increasing drug prices, recent foreign takeovers of large Indian drug manufacturers and the potential diversion of Indian-made drugs to more lucrative markets in other countries reportedly led the prime minister to convene a meeting with the ministers of health, commerce and finance. The government rejected proposals to limit foreign investments and will continue to allow 100 percent foreign direct investment.  

Foreign takeovers, however, will go before the Foreign Investment Promotion Board for up to a six-month review during which the Competition Commission of India will evaluate the proposed deal. With enhanced powers, the commission is expected to be able to prevent industry cartels, while arbitrary price increases for pharmaceuticals are considered a matter for compulsory licensing and the Drug Price Control Order. See Pharma Times, October 11, 2011.