RBI has clarified vide its circular dated 21st April, 2014 that in case of FDI in the pharma sector, “non compete clause” would not be allowed in the agreements except in special circumstances and that too only with the approval of the Foreign Investment Promotion Board. FDI is allowed in pharma sector upto 100% in greenfield investments under the automatic route and 10% in brownfield investments (i.e. investments in existing companies) with the government approval.
The relevant RBI circular can be accessed here.
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