FDI Flows into the Indian Pharmaceutical Industry: An Analysis of Trends and Constraints

Abstract

India’s economic reforms since 1990s and World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights have caused significant changes in the operational environment of the Indian pharmaceutical industry (IPI). In this backdrop, this study examines the Foreign Direct Investment (FDI) flows into the firms of IPI. It finds that the amount of FDI, the number of FDI recipient firms and the number of source countries of FDI are larger during the product patent regime as compared to the process patent regime. The factor analysis of primary data presents the perception of 64 sample firms of IPI as regards the main constraints of FDI inflows in the product patent regime.