What changed
Previously, 100% FDI under automatic route was allowed for all pharma investments. Now, greenfield investments retain automatic approval, while brownfield investments (in existing companies) require government approval route.
What it means for you
Banks must ensure that brownfield pharma FDI proposals are routed through government approval, not automatic. This adds compliance checks for AD banks processing such investments. Greenfield deals remain straightforward under automatic route.
What you must do
- Update internal FDI processing guidelines to distinguish greenfield vs brownfield pharma investments.
- Advise customers that brownfield pharma FDI now requires government approval before remittance.
- Ensure AD Category-I staff are trained on the new approval route for brownfield pharma investments.
- Monitor and report brownfield pharma FDI applications separately to RBI as per revised norms.
Who it affects
AD Category-I banks processing pharma FDI, Foreign investors in Indian pharma companies, Indian pharma companies seeking brownfield FDI
What is the difference between greenfield and brownfield investments in pharma?
Greenfield means new investments (e.g., building new facilities), while brownfield means investments in existing companies (e.g., acquiring stakes).
Does this circular affect existing FDI approvals?
No, it applies to new investments. Existing approvals under earlier rules remain valid.
What should AD banks do if a customer applies for brownfield pharma FDI?
They must inform the customer that government approval is required and guide them to submit the application through the prescribed route.