Jul. 26 – The Department of Industrial Policy & Promotion (DIPP) has referred the notification issued in May that forbids foreign direct investment in tobacco manufacturing back to the Department of Economic Affairs (DEA) and the Reserve Bank of India.
The RBI had requested that the DIPP check possible clauses that could prevent clandestine current account inflows in the guise of marketing services by subsidiaries or group companies floated by global tobacco firms reports The Business Standard.
DIPP focuses on investments made under capital account transactions following the Foreign Exchange Management Regulations of 2000. Current account transactions follow the Foreign Exchange Management Rules issued by the DEA along with the central bank.
The agency says the tobacco FDI issue is more apt for DEA and RBI. Foreign direct investment in the tobacco industry remains restricted in India. Previous attempts by foreign companies to increase their stakes in local tobacco firms have been aborted or suspended.
