India is poised to reject Shanghai Fosun Pharmaceutical Group’s proposed $1.3-billion takeover of drugmaker Gland Pharma, according to people familiar with the matter, scuppering the biggest-ever Chinese acquisition in the country.

The Cabinet Committee on Economic Affairs (CCEA), which is chaired by Prime Minister Narendra Modi, has decided to block the Chinese firm’s purchase of an 86 per cent stake in Gland Pharma, according to the people. The companies haven’t been formally notified of the move yet, the people said, asking not to be identified because the information is private.

Tensions between China and India have escalated amid a renewed spat over territory in a remote area of the Himalayas, one of the most serious flare-ups between the two Asian giants since a border war in 1962. A collapse of the acquisition would be a setback for Fosun Pharma, which had sought Gland Pharma’s stable of generic injectable medicines and facilities approved to manufacture products for sale in the US.

Fosun Pharma, backed by Chinese billionaire Guo Guangchang, agreed in July last year to acquire control of Gland Pharma from an investor group, including KKR & Co. The setback highlights the difficulties faced by China’s once-prolific acquirers, who are facing mounting pressure at home and abroad. HNA Group recently scrapped the purchase of an in-flight entertainment provider, while Dalian Wanda Group agreed to sell most of its theme-park assets amid scrutiny from regulators.

The Gland Pharma purchase had already completed Indian antitrust filings and been reviewed by country’s Foreign Investment Promotion Board. Jagdish Thakkar, a spokesman in the Prime Minister’s Office, didn’t return phone calls, while an email sent to Cabinet Secretary Pradeep Kumar Sinha wasn’t answered. Representatives for Gland Pharma and KKR didn’t immediately respond to requests for comment.

A representative for Fosun Pharma declined to comment beyond an exchange statement last week. Fosun Pharma said in a July 27 filing to the Hong Kong bourse that it had obtained relevant approvals from Chinese authorities. The acquisition is still subject to the review and approval of India’s CCEA, so the termination date has been further extended to September 26, the filing shows.

Chinese drugmakers have grown more ambitious in seeking deals that will give them access to the US, the world’s biggest pharmaceutical market. Valeant Pharmaceuticals International this year sold its Dendreon Pharmaceuticals unit to Chinese conglomerate Sanpower Group for $820 million. Humanwell Healthcare Group, a Chinese maker of anesthetics and contraceptives, is part of a consortium that agreed in June to buy US-based RiteDose for about $605 million.

* CCEA, chaired by PM, to block Fosun Pharma’s purchase of 86% in Gland Pharma

* Border spat between India, China have escalated tensions

* Fosun, Gland still to be officially notified, people say

* The Gland Pharma purchase had already completed Indian antitrust filings

* It had been reviewed by India’s FIPB too