Mumbai, Apr 22 (KNN)  The Reserve Bank of India (RBI) has clarified that non compete clause would not be allowed except in special cases for foreign direct investment in the pharmaceutical sector.  Simply put, the regime would now be more open without giving any handle to the existing partners to block entry of investment from abroad.

“Foreign Direct Investment (FDI) up to 100 per cent is permitted under automatic route for greenfield investments and FDI up to 100 per cent is permitted under Government approval route for brownfield investments (i.e. investments in existing companies) in pharmaceuticals sector, the RBI said in a notification yesterday.

The extant FDI policy for pharmaceutical sector has since been reviewed and it has now been decided with immediate effect that the existing policy would continue with the condition that ‘non-compete’ clause would not be allowed except in special circumstances with the approval of the Foreign Investment Promotion Board (FIPB) of the Government of India.   

In this regard, it has asked banks to inform the concerned customers and constituents.

The Reserve Bank has since amended the concerned regulations accordingly through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2014 which have been notified on April-7.  (KNN/ES)