DPIIT working on proposal to further tighten FDI rules in tobacco sector

The Commerce and Industry Ministry is working on a proposal to further tighten the foreign direct investment norms in the tobacco sector to check promotional activities and curb smuggling in the segment as firms are trying to circumvent norms, an official said.

At present, foreign direct investment (FDI) is prohibited in the manufacturing of cigars, cheroots, cigarillos and cigarettes of tobacco or its substitutes.

However, it is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contracts in the tobacco sector.

"FDI in tobacco is prohibited, and there is a need to control the sectors' promotional activities also. By doing promotion of those products, some companies try to create a system where smuggling increases," the official said.

The Department for Promotion of Industry and Internal Trade (DPIIT) has circulated a draft note seeking the views of different ministries on the issue.

The official added that ..