Tobacco FDI up for review on Thursday

NEW DELHI: A comprehensive policy on discouraging tobacco use, including ban on imports and foreign direct investment (FDI) in the sector, is scheduled to be considered by the Union Cabinet on Thursday. The proposed policy also seeks to impose higher taxes, increasing excise and barring import of tobacco products to discourage tobacco consumption which is seen as a key cause of cancer.

The health ministry has sought inter-ministerial cooperation on comprehensive trade and tax policy to bring down tobacco production, trade and consumption in the country. Although there has been no fresh foreign investment in the tobacco industry for 11 years, the policy does not ban foreign investments in the sector.

The Cabinet decision would have a major impact on the Japan Tobacco International���s (JTIL) proposal to infuse funds to revamp its loss-making Indian joint venture.

The proposal has been deferred twice in meetings held by the foreign investment promotion board (FIPB) fol-lowing objections from the health ministry. Issues specific to ban on FDI in tobacco would be taken up separately by the Cabinet Commit-tee on Economic Affairs (CCEA).

The issue has been triggered by the JTIL���s proposal to increase its for-eign holding from existing 50% to 74%. The company needs FIPB ap-proval to enhance its stake.