The Foreign Investment Promotion Board (FIPB) will reportedly scrutinize all proposals for foreign investment in existing Indian pharmaceutical companies till the time the Competition Commission of India Act is amended.

The amendments to the Competition Commission of India Act are being reviewed to ensure an unambiguous oversight of transactions by foreign investors in the pharmaceutical companies.

A source with direct knowledge of the development said, "Every proposal for foreign investment in existing Indian pharmaceutical companies will go to FIPB till the time the Competition Act is amended,"

The source added that the decision to send all FDI proposals in pharmaceutical companies to the FIPB in a meeting chaired by Prime Minister Manmohan Singh.

Following the takeover of Indian pharmaceutical companies like Piramal and Ranbaxy, the union health ministry as well as the department of industrial policy & promotion (DIPP) had sought to lower the FDI to 49 per cent. Previously, 100 per cent foreign investment was allowed via the automatic route. In other words, foreign investors were not required prior government approval to invest in pharmaceutical companies.

Consequently, the Prime Minister intervened and recommended that all foreign investment proposals in existing pharmaceutical companies be vetted by FIPB for the next six months and then by the CCI.