Cigarette maker Godfrey Phillips tanks 20 %

According to certain reports, commerce ministry proposes to ban FDI (foreign direct investment) on management contracts for foreign brands operating in the country. The government aims at banning complete inflow of FDI in the country in the tobacco sector.

"Views of all the concerned ministries, including Health and Finance Ministry was included in the note," as per reports.

As per current foreign investment terms, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contracts in the tobacco sector.

However, FDI is barred from manufacturing of cigars, cigarettes of tobacco and also tobacco substitutes.

The ban holds importance as it would by all the means put a stop on any type of inflows coming into the sector via the foreign route in any of the allied products.

Commerce Ministry has forwarded final note for cabinet consideration.

Reacting to this development shares of Godfrey Phillips tanked 20 per cent, and hit a lower circuit to hit an intra-day low to close at Rs 920.65 on NSE.