Curbs on Cigarette import ?

Discussion in 'Economy & Infrastructure' started by nrj, May 2, 2012.

  1. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    NEW DELHI: The government is mulling curbs on import of cigarettes and a complete ban on foreign participation in wholesale trading in tobacco and cigarettes.

    The move comes two years after India disallowed foreign direct investment in cigarette manufacturing.

    The finance ministry has written to the commerce ministry to consider imposing restrictions on cigarette imports in the upcoming foreign trade policy.

    "There is a thinking that FDI should be discontinued in wholesale cash and carry also, and that the government should impose restrictions on imports of cigarettes," a government official privy to the development said.

    FDI in cigarette manufacturing was banned in 2010, but wholesale cash and carry operations were left open for the investment route. Following the ban, some tobacco companies with FDI set up wholesale cash and carry operations to cater to domestic demand.

    The proposal to curb imports will benefit domestic cigarette manufacturer ITC, which has a stranglehold on the country's cigarette market.

    On the other hand, companies that rely on imports for wholesale cash and carry operations, such as Godfrey Phillips, may need to restructure their businesses.

    "The government is introducing a series of policies that are not investor friendly. This is one of them," said KK Modi, chairman of Godfrey Phillips India, which has a joint venture with US tobacco company Philip Morris for wholesale trading of cigarettes including Marlboro.

    Experts say a complete ban may not be in the offing owing to India's commitments under World Trade Organisation rules.

    Cigarettes can be imported under the open general licence (OGL) route, the most liberalised form of import licence that does not place any export obligation on the importer. Other forms of licences place restrictions in terms of quantity or exports.

    Ministries including the health, finance and commerce and industry are involved in consultations on the issue in the backdrop of the new foreign trade policy.

    The Director-General of Foreign Trade had initiated discussions on removing cigarettes from under OGL after the Consortium of Indian farmers Associations demanded a ban on cigarette imports.

    "Smokers, and those wanting to start smoking, will continue to access cigarettes from different sources," Modi added.

    The move to ban fresh foreign investment in cigarette manufacturing had come up soon after Japan Tobacco announced its intention to raise stake its Indian arm to 74% from 50%.

    In the past, British American Tobacco has attempted to raise stake in ITC but failed. BAT is the single-largest shareholder in ITC with about 32% stake.

    Cigarette import curbs likely: End of the road for Camel Marlboro, Benson & Hedges? - The Economic Times
     
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  3. pmaitra

    pmaitra Moderator Moderator

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    About time.

    I may be a minority here, but let us kick out all these Smirnoff, Sand Piper, and all foreign brands (well at least heavily tax them).
     
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  4. Ray

    Ray The Chairman Defence Professionals Moderator

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    This is what is called discrimination.

    Imagine the poor and the deprived and so called oppressed segment of society being denied their daily fix as it is with the tobacco products prices once again hitting the ceiling!

    And now encouraging smuggling to dry out the indigenous industry that supplies the poor!
     
  5. mayfair

    mayfair Elite Member Elite Member

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    Never gonnae happen Brigadier sir! As far as I am aware, Bidi is still exempt from any form of cess, mandatory quality controls, health tax etc. The poor and the rich alike will continue to toast their lungs into oblivion while the manufacturers make merry and the government rakes in the tax revenue.

    I think it is time we completely legalised cannabis as well. Should keep the junkies from the hard stuff.
     
    Last edited: May 2, 2012
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  6. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Agree with Mayfair.

    Everybody affords good-old beedi !

    [​IMG]
     
  7. Son of Govinda

    Son of Govinda Regular Member

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    :fyeah: India can set a major precedent and really open up new markets if they do. I mean just look at how successful Holland's cafes are when it comes to tourists and the economy. We can grow the best stuff for dirt cheap when compared to western nations, and marijuana truly is one of the best investments when it comes to farming.
     
  8. sob

    sob Moderator Moderator

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    If this legislation goes ahead, the price of ITC shares are going to hit the roof.
     
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