India
Calling for a ban on foreign direct investment (FDI) in tobacco sector, the Federation of All India Farmer Associations (FAIFA) recently said multinational firms are using ambiguities in the FDI policy to endorse international brands in the country, which encourages illegal trade.
FAIFA, which represents tobacco growers in India, alleged the multinational companies (MNCs) switch supply chains globally depending upon currency fluctuations and labor arbitrage, thereby making for an unstable employment opportunity and not adding value in the domestic economy.
“We have written to prime minister highlighting how the multinational tobacco companies are using ambiguities in FDI policy to endorse international brands in India which encourages illegal trade,” FAIFA general secretary Murali Babu said in a statement.
FAIFA also welcomed a move by the Department of Industrial Policy and Promotion to ban FDI in tobacco sector, which has received support from the finance ministry.
“MNCs possess the unique competitive ability to switch supply chains globally depending upon currency fluctuations as well as opportunities arising from labor arbitrage. This does not also make for a stable employment opportunity and value addition in the domestic economy,” FAIFA said.
The tobacco farmers’ body further said: “As a result, the country today is witnessing a jobless growth in consumption besides significant outflow of foreign currency in the form.” The body further said there has been a steep decline in legal cigarette volumes and the consequent reduction in the utilization of flue-cured Virginia tobacco in cigarette has had “a devastating impact” on the tobacco farmers.
It blamed increased taxation on legal cigarettes and “the resulting growth of illegal cigarettes in the country which the multinational companies promote through the loopholes in FDI” for the plight of the tobacco farmers.