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FDI: Financial incentive
On 21 April 2014, the Reserve Bank of India decided to disallow the incluson of a "non-compete clause" for Foreign Direct Investment (FDI) in the pharmaceutical sector except in special circumstances, which would require the approval from the Foreign Investment Promotion Board (FIPB) of the Government of India.
Non-compete clauses involve the buyer of a corporate asset seeking a binding assurance from the seller that the latter will not subsequently compete against the buyer after the transaction has been completed. Such clauses, therefore, potentially limit competition to the benefit of all incumbents, including domestic and foreign firms. The banning of these clauses, therefore, does not introduce discrimination against foreign firms per se.
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