INDIA BUSINESS WORLD - JULY 1st - JULY 31st - 2008
FIPB DEFERS FDI NOD FOR JAPAN TOBACCO
THE Foreign Investment Promotion Board (FIPB) has deferred a proposal from Japan Tobacco International (JTI), the world’s third largest cigarette manufacturing company, to increase stake in its Indian venture to 74% from the current level of 50%.
According to officials present in FIPB meeting held here, the company’s foreign direct investment (FDI) proposal has been supported by the department of industrial policy and promotion (DIPP), which frames the country’s FDI policy. “The proposal of the tobacco company conforms to current policy allowing up to 100% FDI, provided the company has an industrial licence to manufacture cigarettes,” g o v e r n m e n t sources said. The final decision has been deferred in order to obtain detailed information about original ownership of the company, they added. Ownership of the company had changed in view of Japan Tobacco taking over RJ Reynolds.
JTI, owner of the famous Camel brand, has sought to bring in fresh investment into its Indian arm to revamp its loss-making operations. In lieu of its investment, the company has sought FIPB approval to raise its stake from 50% to 74%. The company acquired its Indian operations after it bought RJ Reynolds globally. RJ Reynolds had a 50:50 JV with the Delhi-based Modi family, which later sold its stake. “The proposal is likely to be considered in the next FIPB meeting,” the sources said. The health ministry, however, is not in favour of any proposal for foreign investment in tobacco businesses.
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