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FDI equity inflow into pharma sector hits a low at $100 million in Q1 FY27
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Gireesh Babu, New Delhi
November 02 , 2026
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After registering a 56% growth in Foreign Direct Investment (FDI) equity infusion into the drugs and pharmaceuticals sector in the country during the fiscal year 2025-26, the first quarter of 2026-27 has witnessed a weak foreign direct equity infusion into the sector.
According to data from the ministry of commerce and industry, the sector reported equity infusion of around $100 million, which is around Rs. 948 crore, during the first three months of the current fiscal year. This is compared to around $1.2 billion (Rs. 10,273 crore) foreign direct equity attracted by the sector in the first quarter of last year.
The decline comes at a time when the services, trading, telecommunications, and chemicals sector has recorded higher inflows compared to the corresponding quarter of last fiscal year.
The cumulative equity flow during the longer period from April, 2000 to June, 2026, into the sector has been reported at $25.43 billion (Rs. 1,60,051 crore) and the sector managed to hold its share in the total FDI equity inflow in US Dollar terms, at 3.15%, despite the decline in the first quarter of the fiscal year.
However, for the first quarter of 2026-27, the equity inflow into the sector is a meagre 0.51% of the total FDI equity inflow of $19.82 billion (Rs. 1,86,661 crore) into the country. This include the equity inflow, along with re-invested earnings, and other capital. The total inflow during the quarter has reported a 6% growth from $18.62 billion (Rs. 1,59,428 crore) in US Dollar terms.
The fund infusion into the drugs and pharmaceuticals sector during the financial year 2025-26 has registered a 56% growth at $1.91 billion (Rs. 16,722 crore) in US Dollar terms, from $891 million (Rs. 7,500 crore) in 2024-25.
It may be noted that the equity infusion into the sector during 2024-25 was a five-year low, and was around 16% lower compared to the $1.06 billion equity infusion reported in the fiscal year 2023-24.
The fund infusion declined almost 48.3% in the year 2023-24, as compared to $2.06 billion in FY 2022-23. The foreign fund infusion in FY 2022-23 was a 46% growth from $1.41 billion in 2021-22, according to official data.
In FY25, for the first time in the last five years, the inflow has declined to below $1 billion.
In pharmaceuticals, FDI up to 100 percent in Greenfield projects and up to 74 per cent in brownfield projects is allowed under the automatic route. Foreign investment beyond 74 per cent in brownfield pharma projects requires Government approval. As per FDI Policy 2020, up to 100 per cent foreign investment is allowed under the automatic route in the medical devices sector. Apart from this, the Department considers all FDI proposals of the pharmaceutical and medical devices sectors where investors or ultimate beneficiaries are from countries sharing land border with India.
After the abolition of Foreign Investment Promotion Board (FIPB) in May 2017, the Department of Pharmaceutical (DoP) has been assigned the role to consider the foreign investment proposals under the government approval route.
The Department of Pharmaceuticals considers FDI proposals falling under Government approval route in pharmaceutical and medical devices sector for approval as per extant FDI Policy and in accordance with the provisions of the Foreign Exchange Management Act, 1999.
FDI applications are submitted on National Single Window System (NSWS) for Government approval which are processed online through the Foreign Investment Facilitation Portal (FIFP) of Department for Promotion of Industry & Internal Trade (DPIIT), for digital, faceless and single-window clearance of such applications, says the DoP.
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