Government is now planning to completely ban foreign direct investment (FDI) in the tobacco sector.
Currently, FDI is allowed in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contract in the tobacco sector.
It is however, prohibited in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes.
According to PTI report, Commerce and Industry Ministry is coming out with propose to even ban FDI in licensing for franchise, trademark, brand name and management contract in the sector. It would eventually mean that FDI would be totally banned in tobacco segment in any form.
Ban would remove the possibility of indirect flow of overseas funds to the tobacco sector.
Ministry has already distributed a draft Cabinet note to seek suggestions of different departments including health, commerce, finance and Niti Aayog.
Move also assumes significance as India is signatory to the Framework Convention on Tobbaco Control, under which it has the responsibility of reducing consumption of tobacco products.
It is now obligatory for all tobacco products to carry larger pictorial warnings covering 85 percent of the packaging space.