The pharmaceutical sector experienced a significant increase in Foreign Direct Investment (FDI) equity inflow during the first half of the 2024-25 fiscal year, reversing a previous year’s 48% decline. From April to September 2024, the sector witnessed a dramatic increase to $520 million, a leap from $117 million in the same period the previous year.
Cumulatively, since April 2000 until September 2024, the pharmaceutical industry has absorbed $23.05 billion in foreign equity, contributing to 3.25% of the total FDI inflow into the nation during this timeframe.
The quarter ending September 2024 saw nearly tenfold growth in capital infusion, jumping to $284 million compared to $27 million in the equivalent quarter the previous year. The previous quarter (April to June 2024) also reported a substantial 162% growth, reaching $236 million from $90 million year-on-year.
By September 2024, the total FDI equity inflow amounted to $708.7 billion. The services sector maintained dominance with 16.25% of the inflow, followed by sectors such as computers and software, trading, and telecommunications, among others, with pharmaceuticals covering 3.25%.
In Rupee terms, the sector recorded almost a fourfold expansion in the first half of the fiscal year, amassing Rs. 4,349 crore from Rs. 964 crore in the previous year. From April 2000 to September 2024, the total Rupee-equivalent FDI inflow stood at Rs. 1,39,229.79 crore, as per data from the Ministry of Commerce and Industry.
For the quarter ending September 2024, the fund inflow reached Rs. 2,378 crore, a significant rise from the Rs. 221 crore in the same quarter the previous year.
Notably, fiscal year 2023-24 registered a 48.3% decline in FDI inflow following a preceding year’s 46% increase. The annual foreign equity infusion in the sector was $1.06 billion for 2023-24, sharply down from $2.06 billion in 2022-23 and $1.41 billion in 2021-22. In Rupee terms, FY24 saw a near 47% decrease, with inflows at Rs. 8,844 crore versus Rs. 16,654 crore the previous year.
The pharma sector allows up to 100% FDI in greenfield ventures via the automatic route, whereas foreign investments exceeding 74% in brownfield projects require governmental approval.
Since the dissolution of the Foreign Investment Promotion Board (FIPB) in May 2017, the Department of Pharmaceuticals has overseen foreign investment proposals through the government approval route. Additionally, since April 17, 2020, the department also reviews FDI proposals in the pharmaceutical and medical devices sectors originating from countries sharing a land border with India.