1. Blow for cigarette stocks, Godfrey Phillips tanks 13%

Blow for cigarette stocks, Godfrey Phillips tanks 13%

Shares of cigarettes manufacturers such as Godfrey Phillips, VST Industries and ITC came under pressure on reports that the government is working on a proposal to completely ban foreign direct investment (FDI) in the tobacco sector

By: | Updated: April 26, 2016 11:57 AM
Cigarette stocks - FDI blanket ban Shares of cigarettes manufacturers such as Godfrey Phillips, VST Industries and ITC came under pressure on reports that the government is working on a proposal to completely ban foreign direct investment (FDI) in the tobacco sector. (Photo: Reuters)

Shares of cigarettes manufacturers such as Godfrey Phillips, VST Industries and ITC came under pressure in the early trade on Tuesday on reports that the government is working on a proposal to completely ban foreign direct investment (FDI) in the tobacco sector.

The ban would eliminate the possibility of indirect flow of overseas funds to the tobacco sector. ITC, Godfrey Philips and VST had raised serious concerns over this move.

On the news, Godfred Phillips shares tanked as much as 13 per cent in the early trade on BSE. The scrip was trading 12.78 per cent down at Rs 985 (at 9.26 am). ITC and VST Industries were trading 1.09 per cent and 2.61 per cent down at Rs 317.50 and Rs 1,605, respectively at the same time.

At present, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contract in the tobacco sector. However, it is prohibited in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes.

According to sources, the Commerce and Industry Ministry is proposing to even ban FDI in licensing for franchise, trademark, brand name and management contract in the sector. It would eventually mean that FDI would be totally banned in tobacco segment in any form.

(With inputs from PTI)

  1. A
    Akash
    Apr 26, 2016 at 5:24 am
    Before all completely ban Alcohol industry with immediate affect. And why not ban cigarette selling in India completely.
    Reply
    1. J
      Jayanta
      Apr 26, 2016 at 5:18 am
      Thats a very good decision by the govt... we should not encourage the Ciggereate industry any more...
      Reply
      1. n
        netonplus.com
        Apr 26, 2016 at 5:22 am
        Once any Govt. should show their courage towards the complete banning of Chewing, Smoking and Alcohol...
        Reply
        1. P
          Prakash
          Apr 26, 2016 at 5:20 am
          In the same way stop FDI in alcohol industry too... that is not possible because we need it and we consume it...
          Reply
          1. R
            ramu
            Apr 26, 2016 at 5:45 am
            Before all totally boycott Alcohol industry with prompt effect. What's more, why not boycott cigarette offering in India totally
            Reply
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