Govt may soon ban FDI in cigarette manufacturing

The commerce and industry ministry has recommended a ban on foreign direct investment in cigarette manufacturing and allied products involving tobacco, an official said.

"We have sent the note to ban FDI in cigarette manufacturing and allied products to the Cabinet and it is expected to be taken up soon," the official said.

The department of industrial policy and promotion, nodal agency under commerce and industry ministry for FDI-related matters, has completed consultation with other stakeholders, including the health and finance ministries, the official added.

The health ministry is also believed to be in favour of the move.

Commerce and industry minister Anand Sharma had recently said that there was no justification for the government to allow foreign direct investment in the tobacco sector.

Currently, 100 per cent FDI in is permitted if the companies manufacture cigars or cigarettes or allied products.

However, an industrial licence is required under the Industries (Development and Regulation) Act, 1951.

The FDI proposals also need approval from the Foreign Investment Promotion Board. Pending the policy review, the government had deferred the proposal from the Japan Tobacco Internationals proposal to raise stake in its Indian venture to 74 per cent from the current 50 per cent.

JTIL are makers of popular Camel and Winston cigarette brands. JTIL had globally acquired R J Reynolds which had a 50:50 joint venture with Modis-controlled Godfrey Phillips.

India, a signatory to the World Health Organisation- sponsored Framework Convention on Tobacco Control, is committed to bring down tobacco cultivation and consumption in the country.