Centre to consider total ban on FDI in tobacco

The government is expected to shortly take up a proposal to totally prohibit Foreign Direct Investment (FDI) in the tobacco industry. Currently, FDI is not permitted in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes. However, it is allowed in various forms of technology collaboration including licensing for franchise, trademark, brand name and management contracts in the sector; and the government will consider closing this route as well for FDI, according to sources. Inter-ministerial discussions were held in this regard and the proposal may be taken up by the cabinet soon. Even if the proposal is okayed, existing collaborations will not be affected as it would be applicable only prospectively.