FDI in drugs and pharmaceuticals was $581 million during April-November 2012, according to the latest data from the Department of Industrial Policy and Promotion (DIPP).
Although the DIPP had proposed tightening of norms for foreign investors in existing Indian pharmaceutical companies, including reducing the FDI cap to 49 per cent in critical verticals from 100 per cent, the Union Cabinet rejected the proposal.
The DIPP had expressed concerns that acquisitions of domestic drug companies may impact availability of affordable drugs in the country.
The government has cleared a Rs 5,168-crore proposal of US-based pharma firm Mylan Inc's to acquire Indian generic drugs company Agila Specialties.
Other big acquisitions include Shantha Biotechnics by French pharma company Sanofi-Aventis. In 2008, Japanese firm Daiichi Sankyo had bought out the country's largest drug maker Ranbaxy for $4.6 billion.
India allows 100 per cent FDI in pharma sector through automatic approval route in the new projects, but foreign investment in the existing companies is allowed only through approval by the Foreign Investment Promotion Board (FIPB).
Other sectors which received good FDI flows during the eight months of the ongoing fiscal year (FY14) include services ($1.46 billion), automobile ($838 million), construction ($889 million) and chemicals ($482 million).
However, overall FDI during the period dipped by 2 per cent to $15.45 billion from $15.84 billion during April-November 2012.
Among countries, Mauritius topped the chart with $3.41 billion foreign direct investment in India during April-November 2013, followed by Singapore ($3.05 billion), the UK (USD 3.12 billion) and the Netherlands ($1.5 billion).
India's economic growth fell to a decade's low of 5 per cent for fiscal year 2012-13 (FY13). The country needs foreign investments to help regain its growth momentum.