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Niti Aayog not in favour of DIPP’s proposal to completely ban FDI in the tobacco sector

10 Jun 2016 Evaluate

The National Institution for Transforming India (Niti) Aayog has raised concern over a proposal by the Department of Industrial Policy and Promotion (DIPP) to completely ban foreign direct investment (FDI) in the tobacco sector. Reportedly, the DIPP has the Union Finance Ministry's support and is expected to discuss the plan with the Department of Commerce and NITI Aayog soon.

At present, in the tobacco sector, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contract. However, FDI is prohibited in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes. The DIPP's proposal will mean there would be a ban on FDI even in the non-manufacturing and technology collaboration areas, leading to a total ban on FDI in the tobacco sector.

Not will NITI Aayog but the major cigarette manufacturers too are against the proposal, as it will mean there would not be any possibility of indirect flow of overseas funds to the tobacco sector, as the ban will also apply to foreign technology collaboration.

As India has signed the WHO Framework Convention on Tobacco Control, which seeks “to protect present and future generations from the devastating health, social, environmental and economic consequences of tobacco consumption and exposure to tobacco smoke”, it along with all other signatories have the responsibility to reduce consumption of tobacco products.

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