Plan to Ban To­bacco FDI may Singe Cig­a­rette Cos

Cir­cu­lated a draft Cabi­net note to ban FDI in li­cens­ing for fran­chise, trade­mark, brand name & man­age­ment in sec­tor

The Economic Times - - Smart -

Mum­bai: Shares of cig­a­rette mak­ers may drop on news that the govern­ment is work­ing on a pro­posal to com­pletely ban for­eign di­rect in­vest­ment (FDI) in the to­bacco sec­tor. Com­pa­nies such as ITC, God­frey Philips and VST In­dus­tries are In­dia’s top-listed cig­a­rette mak­ers.

An­a­lysts said this move elim­i­nates the pos­si­bil­ity of for­eign com­pa­nies buy­ing stakes in lo­cal cig­a­rette mak­ers. News re­ports sug­gested that Ja­pan To­bacco, world’s third-largest listed to­bacco com­pany, was in talks to ac­quire a part of pro­moter’s stake in God­frey Phillips. “Such a news could have far and wide reach­ing im­pact in cig­a­rette com­pany stocks,” said Haren­dra Kumar, MD - In­sti­tu­tional Eq­ui­ties, Elara Cap­i­tal. “Ba­si­cally, govern­ment is sig­nalling a slow death to the to­bacco sec­tor. Clearly, such steps by govern­ment in­di­cate that in fu­ture they do not want any growth in to­bacco sec­tor and hence, it could also im­pact exit op­por­tu­nity of in­vestors.”

Ac­cord­ing to re­ports, the com-

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