Union Cabinet Considering Complete FDI Ban in Tobacco Industry

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Tobacco Menace

In a major boost to ensure the continued and sustained war on tobacco and its use and the tobacco lobby as a whole, The Commerce and Industry Ministry has moved a proposal for the Union Cabinet’s consideration to completely ban any FDI (Foreign Direct Investment) in the domestic tobacco sector, Union Minister for Commerce and Industry Nirmala Sitharaman has said.

Tobacco Menace

The Union Minister (Commerce and Industry) told PTI in an interview today, “We wanted to be sure that for the production of cigarettes or other things (in the tobacco sector), we do not want to encourage FDI because we have ratified (a framework of) the WHO (World Health Organisation). Keeping consistency with that policy of the government, no encouragement should be given.” The minister also clarified that since the move could have a possible negative impact on tobacco farmers, the government was looking at alternate, high-yield crops for them as compensation.

It must be mentioned here that at present, FDI is permitted in any form of technology collaboration in the tobacco sector. Management contracts, franchise licensing, trademarks and brand names are also covered in the FDI ambit.The move could put big global players in the tobacco industry that include the five giants,Altria, British American Tobacco, Imperial Brands, Japan Tobacco and Philip Morris International, collectively known as‘Big Tobacco’ out of the Indian market. However, FDI is prohibited in the manufacturing of cigars, cigarettes and tobacco substitutes in our country. FDI into the country grew by 29 percent to $40 billion in FY 2015-16. The proposed ban would also eliminate the indirect flow of overseas funds to the tobacco sector.

The government’s move is significantas India is a prime signatory to the WHO’s “Framework Convention on Tobacco Control”, whose mandates dictate that our country has the responsibility of reducing consumption of tobacco products.The consumption of tobacco is on the rise in India, with minors often using cigarettes and chewing tobacco even though the sale of tobacco products to minors is a punishable offence.

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