FDI in tobacco may get nod

The government has agreed to permit foreign direct investment (FDI) in tobacco and cigarette sectors, according to the Virginia Tobacco Growers' Association (VTGA) of Andhra Pradesh.

"Prime Minister Manmohan Singh and Commerce Minister Kamal Nath assured K S Rao, Member of Parliament, and Y Sivaji, president of VTGA, of allowing 100 per cent FDI in the tobacco-processing sector subject to industrial licensing," said VGTA spokesperson here.

A delegation of tobacco growers from here had recently met the prime minister and the commerce minister and appraised them of the problems facing the industry. They had appealed to the government to include FDI for "tobacco processing and manufacturing" and not limit it to "tobacco processing" alone. This would ensure that the entire tobacco industry would get the benefit of FDI and help the farmers, the spokesperson added.

The country's growers were paid $1 for a kg of tobacco, while their counterparts in Zimbabwe received $2 a kg. The FDI alone could set right this anomaly, he said.

The Central Tobacco Research Institute (CTRI) had certified that Indian tobacco was in no way inferior to any foreign tobacco. Of the 250 million kg of Virginia tobacco produced in the country, only 100 million kg was consumed domestically. The remaining 150 million kg was exported by a handful of exporters attached to two international merchants, he added.

Besides, exports of cigarettes and value-added tobacco products had not been significant. The Tobacco Board auction floors lacked competition. The entry of MNCs would enable the setting up of research, processing and marketing facilities in the country, he said.