MNCs slam ban on FDI in tobacco

Global tobacco majors Philip Morris International and Japan Tobacco International on Friday deplored as "discriminatory," the Indian government's decision to ban foreign investment in cigarettes.

However, UK-based British American Tobacco (BAT) said the government's decision, would not impact it by virtue of its existing 32 per cent stake in India's leading tobacco player ITC.

"We are very disappointed ... This is a protectionist measure that unfairly discriminates against foreign manufacturers and bears no relation to the achievement of public health goals," Philip Morris International (PRI) spokesperson said.

"We believe tobacco should be regulated not through a ban on FDI, but through other means which apply equally to Indian and non-Indian companies," said a spokesperson of Japan Tobacco International, which had recently tried in vain to increase its stake in its India joint venture to 74 per cent from 50 per cent.

The Cabinet Committee on Economic Affairs had decided on Thursday to ban FDI in the manufacture of cigarettes.

"The approval is expected to enhance public accountability by way of the government's commitment towards proliferation of anti-smoking regime in the country," Home Minister P Chidambaram had said.

However, the global cigarette makers and owners of well-known brands like Camel and Marlboro said that the decision did not treat Indian and foreign companies on equal footing.

Besides, tobacco-related harm can be reduced through other regulatory measures and not through outright ban on FDI.

The Philip Morris spokesperson said the governmental policies to reduce the harm caused by tobacco use would be better pursued through implementation and enforcement of comprehensive regulation and appropriate tax policy "that applies equally to all types of tobacco products".

"Our business in India is done only through ITC and therefore the government ruling will have no impact on our business in India," a BAT spokesperson said. Japan Tobacco International (JTI) operates in India through a joint venture with local partners.

Both JTI and PMI operate in India -- the world's eighth largest market estimated at selling 102 billion sticks annually -- through their joint ventures.