A parliamentary panel recommended permitting regulated foreign direct investment (FDI) in India’s tobacco sector as well as establishing export-only tobacco farms to boost outward shipments and to provide benefits to farmers.
The Parliamentary Standing Committee on Commerce and Industry said in a report that is scheduled to be tabled in the next session of Parliament, “Committee is of the opinion that [FDI] in tobacco sector albeit in a regulated manner would stimulate the production and processing of Indian tobacco thereby boosting its export. The committee, therefore, recommends the department to undertake a study to analyze the prospects of opening FDI investments in the tobacco sector at the earliest.”
FDI is currently prohibited in the manufacturing of cigars, cigarettes, and tobacco substitutes. The committee also recommended exploring the feasibility of establishing export-only tobacco farms to promote the cultivation of tobacco specifically for export purposes, thereby generating market surplus in tobacco exports from India.
Additionally, the panel recommended that export benefits provided to other agricultural and plantation commodities be extended to tobacco and tobacco products in order to provide a level playing field to Indian tobacco exporters.