JTI Challenging India's Handling of FDI

Source from:  Tobacco Reporter 06/04/2010

Japan Tobacco International is planning to take the Indian government to court over its inconsistent handling of foreign direct investment (FDI) in tobacco manufacturing, according to an Express India story quoting "people close to" the company. However, a company official was said to have declined to comment, saying only: "We're not in a position to comment on this matter right now". JTI's proposal to infuse Rs250 million into its Indian joint venture was recently turned down by the Foreign Investment Promotion Board (FIPB) because the government recently changed its policy so as to bar FDI in cigarette manufacturing. The proposal was originally made two years ago when FDI was allowed in cigarette manufacturing, but, since some sections of the previous government opposed it, the matter was referred to a cabinet sub-committee. According to the Express story, JTI feels that it has been a victim of inconsistency in government policy. And some officials agree with it. "The sequence of events leading to the government's decision to ban FDI in cigarette manufacturing does show a series of flip-flops on the part of the department of industrial policy and promotion," said a senior government official who did not want to be quoted. Enditem