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said the ministry had proposed alternative ways to ease concerns about access to medicine.
One idea is to promote generic drugs through tax or fiscal incentives, the official said, adding that greater investment in the sector would help keep down domestic prices and push up exports.
The finance ministry also says that recent moves to restrict the prices of close to 400 drugs, including treatments for diabetes, cancer and hypertension, are a better way to tackle price issues.
"We can bring more drugs under price control if the purpose is to check prices," the finance official said.
Global drugmakers are looking to boost their presence in emerging markets including India to gain access to production of cheaper generic medicines as governments worldwide battle rising healthcare costs and patents expire for a large number of drugs.
Earlier this year, a parliamentary panel headed by Shanta Kumar, a leader of the main opposition Bharatiya Janata Party, asked the government to prohibit foreign investors from buying stakes in India's low-cost generic drug firms, claiming this was pushing up prices.
"A few more takeovers of this kind may destroy the benefits arising out of India's generics revolution," the panel wrote in a report submitted to parliament in August.
The health ministry has expressed concerns that takeovers of generic drugmakers could hit the supply of drugs for government health programmes.
India plans to almost double spending on the health in the next five years. It currently has one of the lowest vaccination coverage levels in the world.
Industry officials and bankers deny that the takeovers have pushed up prices or affected access to drugs.