Foreign Direct Investment in the tobacco sector could see some restrictions being imposed in the coming days, CNBC-Awaaz learns.
Sources have told Awaaz that the Centre is considering to widen the ambit of FDI curbs for cigarette manufacturing companies, and may restrict foreign investment in technology tie ups. If the proposal gets the go ahead, then FDI in any franchise of tobacco products, trademark and any branding of tobacco and similar substitutes such as cigars may soon see FDI restrictions being imposed. Right now, any FDI in the manufacturing of tobacco products is not permitted under government regulations.
Shares of ITC, Godfrey Phillips, VST Industries, NTC Industries and Golden Tobacco are lower by between 1-3 percent on the back of this newsbreak by CNBC-Awaaz.
The proposal is currently under deliberation before the Commerce Ministry and may be sent to the Cabinet for approval, it is learnt.
It is not clear how the change in regulations for cigarette and tobacco industry will impact businesses of major players. The tobacco industry often faces regulatory pressures, including potential tax increases especially ahead of Union Budgets.
Rising concerns over health impact and awareness campaign against smoking too could dampen cigarette consumption over time. Analysts have pointed out that from FY19 to FY23, there has been a slight de-growth in the cigarette volume for VST Industries, from 8556 million units to 8253 million units.
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