Commerce Ministry moots complete ban on FDI in tobacco industry

The Ministry of Commerce and Industry has moved a proposal for the consideration of the cabinet to completely ban foreign direct investment (FDI) in the tobacco sector. According to the proposal, the commerce ministry has proposed a complete ban on FDI in licensing for franchisee, trademark, brand name and management contracts in the sector.

The government does not want to encourage FDI in the manufacture of tobacco products such as cigarettes, cigars, etc. The ministry has received ratification from WHO for such a ban. The cabinet too does not want to encourage cultivation of tobacco in the country.

Currently, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contracts in the tobacco sector. However, it is prohibited in the manufacture of cigars, cigarettes and tobacco substitutes.

The shares of producers of cigarettes and other tobacco products will be watched on Friday’s trading session. Meanwhile, Godfrey Philips India declined 0.98 per cent to Rs 942.3 on intraday basis. ITC fell by 0.42 per cent to Rs 223.6. VST Industries and Golden Tobacco too declined by 3.84 and 2.56 per cent respectively on Thursday.