No non-compete clause in case of FDI in pharma deals

Tags: News
The Reserve Bank today said the non-compete clause will not be applicable in acquisition of existing pharma companies by foreign entities or investors except in certain special cases.

India allows 100 per cent FDI in pharma sector. While FDI is permitted through automatic route in case of greenfield investment or new venture, government approval is required in case of brownfield or existing companies.

"... 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)," RBI said in a notification.

Under a non-compete clause a party agrees not to enter into a similar trade in competition against another party as part of a deal.

The notification follows revision of the extant FDI policy for pharmaceutical sector by the government in January, 2014.

Last week, the central bank had allowed FDI in Limited Liability Partnership (LLP) formed and registered under the LLP Act, 2008 subject to the conditions.

EDITORIAL OF THE DAY

  • It’s time to shift sugarcane production to water abundant states of eastern India

    During the 10 years of UPA rule, the country was able to come out of the so-called sugar cycle — two years of surplus followed by two years of defic

FC NEWSLETTER

Stay informed on our latest news!

TODAY'S COLUMNS

Simon J Evenett

VW scandal has lessons for Make in India

In recent years, when it comes to widespread corporate wrongdoing, ...

Zehra Naqvi

The flame of hate

Pyre. The name itself evokes a sense of foreboding, casting ...

Dharmendra Khandal

So, how do we define a 'vermin'?

These days there’s an ongoing debate whether to declare various ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture