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Fresh FDI banned in cigarette manufacturing
8 April 2010: The Union Government on 8 April 2010 banned FDI in manufacturing of cigarettes thus blokcing the future investment plans of foreign tobacco companies.
The decision is expected to hit a proposed move by Japan Tobacco International (owner of brands - Camel and Salem) to hike its stake in the local operations to 74 per cent from the existing 50 per cent. It will also foil any plans of foreign tobacco companies such as British American Tobacco to increase their holding in either ITC or VST, or any other cigarette manufacturing entity in India.
However, this move will not affect existing FDI investments in the country nor the franchisee operations. The government has kept open the option of FDI in tobacco farming, according to sources.
So far, FDI up to 100 per cent was allowed in cigar and cigarettes manufacture on a case-to-case basis, but there has been growing opposition against encouraging investments including FDI into the sector.
Source: Hindu Business Line