The CCEA has raised objections to the Rs 8,800 crore proposal of Chinese pharma firm Shanghai Fosun to acquire majority stake in domestic company Gland Pharma, a development that come amid heightened tensions between India and China over border dispute.
The Cabinet Committee on Economic Affairs (CCEA) in its meeting last month did not approve the proposal, said sources who did not want to be identified. The ostensible reason behind holding back the approval is the modern injectable technology that the Hyderabad-based Gland Pharma has, which the government is wary of falling into foreign hands.
CCEA has raised certain objections over the deal, said another source without specifying the exact reasons.
In April, the proposal was approved by the then inter- ministerial body foreign investment promotion board (FIPB). It had recommended the Rs 8,800 crore foreign investment proposal of Gland Pharma Ltd to the CCEA for approval.
The Chinese firm sought to acquire stake in Gland Pharma through its subsidiaries outside India, namely Fosun Pharma Industrial Ltd, Fosun Industrial Co Ltd, Ample Up Ltd, Lustrous Star Ltd and Regal Gesture Ltd.
Subsequently, Fosun would get contractual right to acquire 100 per cent shares of Gland Pharma from other shareholders of the company in one or more tranches, as per the proposal approved by FIPB.
Proposals over Rs 5,000 crore approved by the then FIPB required CCEA approval.
The decision on Fosun came amid face-off between the armies of India and China near the Sikkim sector that are inching towards the third month.
When contacted, Gland Pharma said it was yet to get any communication from the government.
"We have not had any official communication from any of the governmental departments so far," Gland Pharma Vice Chairman and Managing Director Ravi Penmetsa said.