India had banned foreign direct investment (FDI) in tobacco manufacturing in 2010. But still, the foreign tobacco companies can invest in the sector through licensing agreements, technology collaboration, and by forming a trading company.
Recently, the Commerce Ministry has proposed a blanket ban on FDI in the tobacco sector. This move has been opposed by NITI Aayog. The government says that as per the World Health Organisation (WHO) Framework Convention on Tobacco Control (FCTC), India is under an obligation to take necessary steps to reduce high consumption of tobacco products which poses danger to public health.
This has not gone down well with tobacco manufacturers. The American tobacco giant, Philip Morris International (PMI) might object to such a blanket ban under India s bilateral investment treaties (BITs). It might challenge the discrimination between domestic tobacco investors and foreign investors and questions may be raised as to why less foreign investment-restrictive regulatory measures weren t adopted to meet the objective. Measures like plain packaging and labelling and taxes on tobacco products can be taken instead of complete ban on FDI. In fact, India will be on a stronger wicket defending such measures as compared to a blanket ban.
There is a need of a stronger political will and a proactive government to fight the menace of high tobacco consumption