The health ministry plans to oppose the application from Japan Tobacco International Ltd, the world's third largest tobacco company, to the Foreign Investment Promotion Board to raise its stake in its Indian venture from 50 to 74 per cent. The application is slated for consideration in the FIPB meeting on Tuesday.
Other ministries, however, like the ministry of industrial policy and promotion, may not oppose the move since it conforms to current policy allowing up to 100 per cent foreign direct investment provided the company has an industrial licence to manufacture cigarettes.
According to a health ministry source, Health Minister A Ramadoss has been at the forefront of the opposition to the use and spread of tobacco products including banning on-screen depictions of cigarette smoking.
JTIL's proposal is considered a test case, given that there has not been any application to the FIPB related to tobacco since 1998 due to vehement opposition from the domestic tobacco lobby and parts of the government.
JTIL, that owns cigarette brands like Winston and Gold Cost (launched in Bangalore, Kerala and Mumbai last year) and Camel (yet to be launched in India) is looking for government clearances to invest up to $ 100 million to expand its presence in the Rs 17,000-crore branded cigarette market that is growing at 8-10 per cent annually.