FDI in tobacco sector cannot be encouraged because of public health reasons and also it would be against India's commitment to the WHO, Commerce and Industry Minister Nirmala Sitharaman today said.
She said it is a health affecting sector and the country has certain commitments under the WHO as per which India has to proactively reduce the quantum of growth of tobacco.
"We therefore cannot encourage anything which is going to bring in encouragement (to grow tobacco)... If we allow FDI in this sector, there will be more cigarette producing companies in this country, which means farmers will be tempted to grow more," she told reporters here.
The statement assumes significance as the ministry has proposed to completely ban foreign direct investment (FDI) in the tobacco sector.
At present, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contract in the tobacco sector.
However, it is prohibited in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes.
Sitharaman said the ministry constantly monitor how much FCV tobacco is produced in the country and there should be increase in that.
The ministry deals with only FCV variety. It constitutes less than 20 per cent of the total tobacco produced in India.
If the government encourage farmers to grow more, "I will be contradicting the commitments Of WHO. So that is one of the reason why commerce ministry can not support FDI in the tobacco sector," she said adding if anybody wants to export raw FCV, they can do.
"So that is why we are getting a cautious approach as regards FDI in tobacco related sectors," she said.
Anything that is directly encourage tobacco growing, "we can't afford to be there," Sitharaman said.
Further talking about the warning being brought in to bring down Indian cigarette consumption, she said:" cigarette consumption per se has not come down in the sense that lot of illegal cigarette are coming into this country".
An official said that the quantum that is declared by customs about the impounded illegal cigarettes which have come into this country is far higher than what India sell legally.
Those packets have no pictorial warnings and sometimes the warnings are not in English language, the official said.
The total number of cases of smuggling of cigarettes detected by field formations of the Customs Department across the country during 2014-15 was 1312 consignments with a value of Rs 9.24 crore and during 2015-16, the number of cases was 2,731 with a value of Rs 16.16 crore.
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