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FDI in tobacco: DIPP meets stakeholders; participants shared mixed views

Press Trust of India  |  New Delhi 

associations and industry today shared mixed views in a meeting called by the commerce and industry ministry on issues related to (FDI) in the tobacco sector.

The meeting was chaired (DIPP) here.

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

Krishan Kumar Modi, Chairman, said the current policy in the sector should continue without any change.

"There is no need to bring (FDI) restrictions because other countries will also put restrictions and we are a major exporter of products such as cigarettes," he said after the meeting.

Modi added that a level paying field should remain for both domestic and foreign players in the country.

"Most of the large companies of the world are already here. So, if you ban few more that is not going to change the ground reality but on the other hand it will perpetuate monopoly," he said.

He said that not much has come into the sector as no new license to manufacture are being given.

of Peridepi Tobacco Society Yashwanth K C said FDI should not be banned in the sector as new technologies would help in getting remunerative prices to farmers.

"We are for FDI. We invite the technologies because for farmers. Markets have stagnated for so many years. It is also occupied by limited players and they have exclusive control over commodity and the trade.

"Entry of multi national firms in the sector here would provide a level playing field. If we have multiple players, there will be more competition and farmers will get multiple choices," he told

However, Federation of All Associations (FAIFA) and Tobacco Growers Forum (KTGF) strongly opposed FDI in the sector.

They want complete prohibition of foreign investment in the segment.

"We have modern technologies and we do not want any kind of FDI in the sector," B V Javare Gowda said.

Sharing similar views, said that the association asked the government to put restrictions on FDI.

Today's meeting assumes significance as the DIPP, under the ministry, had earlier in 2016 floated a proposal to put a complete ban on FDI in the tobacco segment.

In that proposal, the ministry had proposed to ban FDI in licensing for franchisee, trademark, brand name and management contracts in the sector, which mean FDI would be totally banned in the tobacco segment in any form.

However, the government could not take any decision on the matter due to concerns raised in certain quarters, including farmers associations and companies like

The domestic tobacco industry is mainly dominated by ITC Ltd, which controls over 78 per cent of the segment.

Representatives from US Business Council, Tobacco farmers Associations, Ficci, Andhra Farmers Welfare Association, Federation of All Farmers Associations (FAIFA) and All are also among the 24 groups participated in the meeting.

The meeting was also important as domestic firms are complaining over tobacco rules in India, saying it discriminates against cigarettes through high taxation and graphic pictorial warnings, thereby promoting smuggling.

Putting a complete FDI ban also assumed importance as India is signatory to the World Health Organisations (WHO) Framework Convention on Tobacco Control, under which the country has the responsibility of reducing consumption of

FDI into the country grew by 9 per cent to USD 43.48 billion in 2016-17.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, April 11 2018. 14:45 IST