Budget 2013: FICCI demands ban on FDI in cigarettes' manufacture & trade

NEW DELHI: The Federation of Indian Chambers of Commerce and Industry ( FICCI) has demanded ban to be announced on FDI in manufacture and trade of cigarettes and other tobacco products in the Budget 2013.

FICCI said that though the government of India has prohibited FDI in manufacturing of cigars, cheroots, cigarillos and cigarettes of tobacco or of tobacco substitutes and has notified the same in May 2010 but still multinationals have set up entities in India for wholesale trading which serves as a platform for creating demand for their brands which is then met through large scale contraband/smuggling.

"This adversely impacts domestic farmer income, employment and revenue interests. Hence the existing ban on manufacturing must be strengthened by extending the ban end to end to cover FDI in manufacture as well as wholesale trade in these products, FICCI demanded.

FICCI further said that to ensure proper implementation of the government's tobacco control policies, the extant ban on FDI in the tobacco sector should be reinforced by appropriate amendments in FEMA to prohibit infusion of funds into the tobacco sector through the following

- Advances against equity

- Preference shares and debentures - convertible or otherwise

- Loans and other forms of debt by whatever name called

- Advances

- Guarantees issued by banks, corporate entities or any other third party

- Letters of comfort

- Through any other means.

FICCI also suggested similar restrictions to be extended to entities set up by multinationals in India with the objective of marketing cigarettes and other tobacco products.