1976: Government Considers Taking Over Foreign Drug Companies
1976: Government considers nationalizing foreign drug firms per Hathi Commission report.
Photo by The Cleveland Museum of Art
In 1976, the Indian government considered taking over multinational pharmaceutical companies, based on the recommendation of the Hathi Commission report. This information was conveyed to the Lok Sabha by the Minister of Chemical and Fertilizers, Mr. P.C.
Sethi. He described the matter as a "complex" one. CPI members Ramavtar Shastri and Mr.
Hiren Mukherjee raised the discussion on the report. Several members strongly advocated for the early implementation of the Hathi Commission report, with Mr. Ramavatar Shastri criticizing the activities of multinational corporations in the pharmaceutical industry and calling for their nationalization.
Key Facts
1976: Govt considering takeover of foreign drug firms
Recommendation: Hathi Commission report
Minister: P.C. Sethi
Discussion raised by: Ramavtar Shastri, Hiren Mukherjee
UPSC Exam Angles
GS Paper 3 (Economy): Industrial Policy, Healthcare
GS Paper 2 (Governance): Government Policies and Interventions
Potential question types: Statement-based, analytical questions on industrial policy and healthcare access
Visual Insights
India's Industrial Policy & Nationalization Journey (1948 - 2026)
This timeline illustrates key milestones in India's industrial policy and nationalization efforts, providing context to the 1976 discussion on taking over foreign drug companies.
India's post-independence economic policy initially leaned towards a socialist model, emphasizing state control and public sector dominance, which led to waves of nationalization. The 1976 discussion on foreign drug companies was part of this broader trend. However, the 1991 reforms marked a significant shift towards liberalization and market-driven policies, leading to a reverse trend of privatization and disinvestment in recent decades.
- 1948First Industrial Policy Resolution (IPR) - Mixed Economy approach
- 1956Industrial Policy Resolution - Emphasized Public Sector dominance, socialist pattern
- 1969Nationalization of 14 major private banks
- 1972General Insurance Companies Nationalization
- 1976Hathi Commission Report & Govt. considers taking over foreign drug companies (NEWS EVENT)
- 1980Nationalization of 6 more private banks
- 1991New Industrial Policy - LPG Reforms (Liberalization, Privatization, Globalization)
- 2014Make in India initiative launched to boost domestic manufacturing
- 2020Production-Linked Incentive (PLI) schemes introduced for various sectors
- 2022Privatization of Air India, signaling continued disinvestment trend
- 2025-2026Ongoing focus on improving Ease of Doing Business, attracting FDI, and strategic disinvestment
More Information
Background
The history of foreign drug companies in India dates back to the pre-independence era, with many European firms establishing a presence to cater to the colonial market. Post-independence, the government's focus shifted towards self-reliance and affordable healthcare. The Patents Act of 1970 was a landmark legislation aimed at reducing the dominance of multinational corporations (MNCs) by allowing process patents rather than product patents, enabling Indian companies to produce generic versions of patented drugs.
This led to a significant growth of the Indian pharmaceutical industry. However, concerns remained about pricing, accessibility, and the influence of MNCs on the healthcare system, leading to further debates and policy interventions.
Latest Developments
In recent years, India's pharmaceutical sector has witnessed a mix of growth and challenges. While the industry has become a major exporter of generic drugs globally, issues related to drug pricing, quality control, and regulatory compliance persist. The government has taken steps to strengthen the regulatory framework and promote domestic manufacturing through initiatives like the Production Linked Incentive (PLI) scheme.
There's also a growing focus on innovation and research and development (R&D) within the Indian pharmaceutical industry, with companies investing in new drug discovery and development. The debate around intellectual property rights and the balance between incentivizing innovation and ensuring access to affordable medicines continues to be a key area of discussion.
Frequently Asked Questions
1. What was the Hathi Commission report about, and why is it important for UPSC Prelims?
The Hathi Commission report, as per the topic, recommended the government to consider taking over foreign drug companies. It's important for Prelims as it highlights a historical perspective on industrial policy and government intervention in the pharmaceutical sector.
Exam Tip
Remember the Hathi Commission is related to the pharmaceutical industry and nationalization.
2. In 1976, which minister informed the Lok Sabha about the consideration of taking over foreign drug companies?
Mr. P.C. Sethi, the Minister of Chemical and Fertilizers, informed the Lok Sabha about the government's consideration of taking over foreign drug companies in 1976.
Exam Tip
Knowing key personalities associated with events can be helpful for matching-type questions.
3. What is the historical background of foreign drug companies in India?
The history of foreign drug companies in India dates back to the pre-independence era, with many European firms establishing a presence to cater to the colonial market. Post-independence, the government's focus shifted towards self-reliance and affordable healthcare.
4. What does 'nationalization' mean in the context of the 1976 news, and why was it considered?
In this context, 'nationalization' means the government taking ownership and control of foreign drug companies. It was considered to achieve self-reliance and provide affordable healthcare by reducing the dominance of multinational corporations.
5. What were the arguments in favor of nationalizing foreign drug companies in 1976?
Arguments in favor included reducing the dominance of MNCs, ensuring affordable drug prices, and promoting self-reliance in the pharmaceutical sector. Mr. Ramavtar Shastri criticized the activities of multinational corporations and called for their nationalization.
6. What could be potential drawbacks of nationalizing foreign drug companies?
Potential drawbacks include reduced foreign investment, potential loss of innovation and technology transfer, and the administrative challenges of managing nationalized entities. The matter was described as 'complex' by Mr. P.C. Sethi.
7. What are the recent developments in India's pharmaceutical sector?
Recent developments include the industry becoming a major exporter of generic drugs, but issues related to drug pricing, quality control, and regulatory compliance persist. The government has taken steps to strengthen the regulatory framework and promote domestic manufacturing through initiatives like the Production Linked Incentive (PLI) scheme.
8. How does the consideration of nationalization in 1976 relate to current government initiatives like the Production Linked Incentive (PLI) scheme?
Both reflect the government's aim to promote domestic manufacturing and reduce reliance on foreign entities in the pharmaceutical sector. While nationalization is a more direct intervention, PLI schemes incentivize domestic production through financial benefits.
9. What was the significance of the Patents Act of 1970 in relation to foreign drug companies?
The Patents Act of 1970 was a landmark legislation aimed at reducing the dominance of multinational corporations (MNCs) by allowing process patents rather than product patents, making it easier for Indian companies to produce generic versions of drugs.
10. Who were the key people involved in the 1976 discussion about nationalizing foreign drug companies?
The key people involved were Mr. P.C. Sethi (the Minister of Chemical and Fertilizers), Ramavtar Shastri, and Hiren Mukherjee, who raised the discussion in the Lok Sabha.
Practice Questions (MCQs)
1. Consider the following statements regarding the Hathi Committee Report, which was in the news in 1976: 1. It recommended the nationalization of all foreign drug companies operating in India. 2. It advocated for the promotion of indigenous drug production and research. 3. It suggested modifications to the Patents Act to encourage local innovation. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.2 and 3 only
- C.1 and 3 only
- D.1, 2 and 3
Show Answer
Answer: B
Statements 2 and 3 are correct. While the report discussed taking over foreign companies, it didn't explicitly recommend nationalization of ALL such companies. It focused on promoting indigenous production and modifying the Patents Act.
2. In the context of the Indian pharmaceutical industry, what was the primary objective of the Patents Act of 1970?
- A.To protect the intellectual property rights of multinational corporations
- B.To promote the production of generic drugs by Indian companies
- C.To increase the prices of essential medicines
- D.To restrict foreign investment in the pharmaceutical sector
Show Answer
Answer: B
The Patents Act of 1970 aimed to reduce the dominance of MNCs by allowing process patents, enabling Indian companies to produce generic versions of patented drugs.
3. Which of the following initiatives is aimed at promoting domestic manufacturing in the pharmaceutical sector in India?
- A.National Health Mission
- B.Production Linked Incentive (PLI) scheme
- C.Skill India Mission
- D.Startup India
Show Answer
Answer: B
The Production Linked Incentive (PLI) scheme is designed to incentivize domestic manufacturing across various sectors, including pharmaceuticals.
4. Assertion (A): The Hathi Committee report advocated for greater government control over the pharmaceutical industry in India. Reason (R): The report aimed to ensure the availability of essential medicines at affordable prices and reduce the influence of multinational corporations. In the context of the above statements, which of the following is correct?
- A.Both A and R are true and R is the correct explanation of A
- B.Both A and R are true but R is NOT the correct explanation of A
- C.A is true but R is false
- D.A is false but R is true
Show Answer
Answer: A
Both the assertion and the reason are correct, and the reason accurately explains why the Hathi Committee advocated for greater government control.