Govt Setting Export Norms For Tobacco

The commerce ministry is working on setting minimum norms like export obligations on raw, processed and manufactured tobacco for entry of 100 per cent subsidiary proposals like Rothman's.

Ministry sources said the intention is to set some minimum conditions that can be satisfied. The conditions will be laid down when the proposal is cleared by the Foreign Investment Promotion Board (FIPB).

Sources said the ministry is looking at setting a certain percentage of the total investment made in raw tobacco each year as the minimum exports of leaf tobacco to be done in the year. Twenty per cent of the investment may be considered, however, the exact percentage may be considered after discussions with industry experts. Companies are however of the view that 20 per cent will be too high.

Further, for manufactured tobacco, It is looking at companies to export a certain percentage of the rated capacity.

The commerce ministry is also to hold a meeting with Rothman's to discuss and set terms for its phased manufacturing programme, export obligations and value addition norms before the FIPB meets again. While a date for the meeting had not yet been finalised, ministry sources said that it will be held soon.

They said that it is keen to push exports of manufactured tobacco in the form of cigarettes.

Tobacco exports stood at Rs 1,058 crore in 1997-98, an increase of 40 per cent over 1996-97. Unmanufactured tobacco exports amounted to Rs 910 crore.

Between April-July this year, total exports of tobacco are estimated at Rs 342 crore. Although the quantity exported has fallen, in value terms the exports are up by 4.4 per cent. India's share in world tobacco trade is over 6 per cent and the major producing states are Andhra Pradesh and Karnataka.

Ministry sources said that there were several lobbies working in favour and against allowing such projects.

The Tobacco Board of India and the Indian Tobacco Growers Association had favoured clearance while others like the Swadeshi Forum, Vishakapatnam, the Bidi Workers union and the East Godvari Trade Union had opposed the project. Ministry sources said that the proposal is likely to be cleared with certain conditions set on such projects, which will apply to future proposals also.