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RBI Banned FDI in manufacturing of tobacco products

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  • RBI has issued a notification which states prohibition applies on the manufacturing of tobacco products activities such as wholesale cash and carry, retail trading as they fall under the sectorial restrictions.
  • It shall be governed by the sectorial restrictions laid down in the FDI policy framed by the Department Of Industrial Policy & Promotion, Ministry of Commerce and Industry, Government of India and in the Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 as amended from time to time.
  • The notification have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).
  • Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes have been prohibited by by FDI.

Cigarette makers decline after RBI confirms the ban:-

  • Post declaration of ban on FDI in manufacturing of tobacco products by RBI, Shares of three cigarette makers lost by 0.02% to 0.31% on BSE(Bombay Stock Exchange)
  • Among cigarette makers, ITC (down 0.02%), Golden Tobacco (down 0.26%) and VST Industries (down 0.31%) declined. Godfrey Phillips India rose 7.7%.