Proposal of M/s. Mylan Laboratories Limited for increase in FDI up to US $ 750 million in MLL by Mylan Luxembourg S.a.r.l. Luxembourg and / or Mylan Group B.V. Netherlands through subscription of equity shares and / or compulsorily convertible debentures for providing MLL part of the funds required for the acquisition of the entire shareholding of JPL post the demerger from its then shareholders
No: --- Dated: Nov, 05 2015
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the proposal of the Department of Economic Affairs for increase in FDI up to US $ 750 million in Mylan Laboratories Limited (MLL) by Mylan Luxembourg S.a.r.l. Luxembourg and / or Mylan Group B.V. Netherlands through subscription of equity shares and / or compulsorily convertible debentures for providing MLL part of the funds required for the acquisition of the entire shareholding of JPL, post the demerger from its then shareholders (including Orizaba and resident Indian shareholders).
With this approval, FDI of US dollar 750 million will be received in the country.
The approval has been accorded subject to following conditions:
(i) The production level of consumables and NLEM drugs and their supply to the domestic market at the time of induction of FDI, be maintained over the next five years at an absolute quantitative level. The benchmark for this level would be decided with reference to the level of production of consumables and/or NLEM drugs in the immediately preceding three financial years to the year of induction of FDI. Of these, the highest level of production in any of these three years would be taken as the level.
(ii) R&D expenses be maintained in value terms for five years at an absolute quantitative level at the time of induction of FDI. The benchmark for this level would be decided with reference to the highest level of R&D expenses which has been incurred in any of the three financial years immediately preceding to the year of induction of FDI.
(iii) The administrative ministries concerned and the FIPB secretariat will provide complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company.
(iv) The company receiving FDI will continue to produce medicines under the NLEM for the domestic tariff areas at the level which would be the highest quantity of production in the previous three financial years for the next five years.
(v) The company will also be required to maintain the R&D expenditure at the maximum level incurred in any of the three financial years immediately preceding the year of induction of FDI. This absolute level should be maintained for the next five years.
(vi) The administrative Ministry concerned and the FIPB secretariat will be provided complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company.
(vii) No non-compete clause in respect of 'prospective investor', and 'prospective recipient entity.
(viii) Second leg of transaction involves infusion of fresh foreign funds by Mylan group for acquiring shares of M/s. Jai Pharma Ltd. The taxability of capital gains arising out of the said transaction shall be examined by the field formation.
(ix) The taxation of dividend, future capital gains on alienation of shares by the foreign investor, interest income and income of any other nature shall be examined by the field formation in accordance with the provisions of Income-tax Act, 1961 and the DTAA as applicable to the facts of this case.
(x) Claim of any tax relief under the Income Tax Act or the relevant DTAA will be examined independently by the tax authorities to determine the eligibility and extent of such relief and the approval will not amount to any recognition of eligibility for giving such relief.
(xi) Approval will not provide any immunity from tax investigations to determine whether specific or general anti-avoidance Rule apply.
(xii) The fair market value of various payments, services, assets, shares etc. determined in accordance with FIPB guidelines shall be examined by the tax authorities under the tax laws and rules in force and may be varied accordingly for tax purpose.