New Delhi ,April 8: The government on Thursday banned foreign direct investment (FDI) in cigarette manufacturing in the country in order to promote a healthy lifestyle among the people.
This is the second most important decision of the government in recent years in connection with discouraging the use of cigarettes in India. Earlier, the government had banned smoking at public places and had put restrictions on tobacco advertisements.
The Cabinet Committee on Economic Affairs, in its meeting on Thursday, decided that FDI must be prohibited in cigarette manufacturing both for domestic use and for exports. “The approval is expected to enhance public accountability by way of the government’s commitment towards proliferation of the anti-smoking regime in the country,” Union home minister P. Chidambaram said.
Asked about the existing foreign investment in the tobacco sector, Mr Chidambaram said the matter did not come up for discussion. Till now 100 per cent FDI was permitted in cigarette manufacturing.
The manufacturing of cigarettes will be included in the list of activities in which FDI is prohibited. “This will bring the policy in line with the administrative decision not to grant industrial licences for cigarette manufacturing. The Cabinet’s decision will also align the FDI policy with the existing legislation on tobacco control to a greater extent,” said the minister.
Meanwhile, according to the report Economics of Tobacco and Tobacco Taxation in India, if the government raises taxes on cigarettes and abides with internationally recommended levels, it will generate more than Rs 18,000 crores annually in new government revenues while saving the lives of millions of Indians.
The report concludes that without strong action over 51 million Indians alive today will die prematurely from bidi and cigarette consumption. The report finds that in spite of that fact, taxes on many popular tobacco products are far too low. Cigarette taxes currently account for less than 40 per cent of the retail price of a package, far below the WHO’s recommended levels of 65 per cent to 80 per cent. Raising cigarettes taxes to 78 per cent of the retail price in India could avert 3.4 million premature tobacco-related deaths and raise about Rs 14,630 crore s in new government revenue each year.
Age Correspondent