In what could be seen as a review of its policy of staying away from expansion of the tobacco industry, the government is considering a proposal to grant industrial licence for manufacturing of cigarettes under the schemes for Special Economic Zones (SEZ) and Export Oriented Units (EOUs).

Sources said commerce minister Kamal Nath would hold a meeting with some industry representatives on Monday to discuss the issue of granting industrial licences in SEZs and for export promotion of tobacco and cigarettes.

The ministries of law and health and family welfare as well as the department of industrial policy and promotion are, however, against any such moves.

India, which has an anti-tobacco legislation, is also a signatory to the international convention against allowing any expansion of the tobacco epidemic. However, the tobacco industry has been lobbying with the government for a re-look into the issue.

Industry body Assocham had recently pointed out that the country?s tobacco export was expected to hit Rs 1,605 crore-mark by the end of this financial year from about Rs 1,506 crore last fiscal.

There were reports earlier that the commerce ministry may permit foreign direct investment in the tobacco sector and also allow entry of multinational cigarette makers. However, several national trade unions had registered their protest, saying it would hurt beedi and local cigarette makers as the foreign companies would flood the market with cheaper cigarettes. The SEZ policy, with its tax sops, has been instrumental in attracting massive FDI in such zones.

Though the SEZ Act and Rules does not overtly bar the cigarette industry from setting up shops in these zones, the government has so far taken a conscious decision in not permitting any units being established in sector-specific or multi-product SEZs.

India has one of the world?s major tobacco industry with about 6 million farmers engaged in tobacco cultivation and about 36 million people dependent on the industry. There has also been a rising demand from countries like Russia, UK, Belgium, Germany and Vietnam.