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Foreign Investment Promotion Board on Wednesday dropped from its agenda a proposal by an Indonesian maker of clove cigarettes, Sampoerna Plc, to set up a trading subsidiary in India.
A government source said neither the trading of cigarettes, cash or carry, nor fresh foreign investment in tobacco and cigarette manufacturing would be allowed.
"Even clove cigarettes, which manufacturers claim are less hazardous, will not be permitted," the source added.
The Indian tobacco industry has lobbied hard with the government to keep foreign companies from entering India. Sampoerna did not propose to set up a manufacturing facility in the country. It had planned to import its brands of clove cigarette like Sampoerna and Gudang Garam and sell them in the local market.
Cash-and-carry wholesale tobacco trading is allowed in India and there are no restrictions on the import of tobacco products, but foreign investment in tobacco and cigarette manufacturing is not permitted.
Earlier, the government had deferred proposals by two of the world's top cigarette makers, Phillip Morris and British American Tobacco, for fresh investment in the tobacco business.
It had also avoided decisions on proposals by Rothmans, now merged with British American Tobacco, and RJ Reynolds.