Govt bans FDI in cigarette-making

Briefing reporters Home Minister P Chidambaram said “the prohibition will be notified and the ban would also be applicable in the Special Economic Zones.” Analysts say the government stands to lose a good deal of revenue by the decision to ban investment of cigarette manufacturing for exports.

The proposal to ban FDI in cigarette manufacturing was mooted by the Department of Industrial Policy and Promotion (DIPP) in the Ministry of Commerce and Industry.

Under the existing norms, 100 per cent FDI is permitted in cigarette manufacturing, but an industrial licence is required and the proposals need to be approved by the Foreign Investment Promotion Board (FIPB).

Asked about the existing foreign investment in the tobacco sector Chidambaram said the matter did not come up for discussion in the CCEA.

DIPP had recommended a ban on FDI in cigarette manufacturing and allied products involving tobacco.

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