FDI proposal raises Prakasam tobacco growers’ hopes

Farmers in traditional tobacco-growing areas in Prakasam district, which accounts for more than 50% of the State’s production, are jubilant as the Centre mulls over allowing Foreign Direct Investment in cigarette manufacturing.

India, which is now being looked at only as an opportunity market, will become a definite market if leading global players are allowed to set up 100 % export-oriented units, felt a group of tobacco growers at the Ongole I auction platform soon after offering bright grade variety at the e-auctions.

A crucial meeting convened by the Department of Industrial Policy and Promotion (DIPP) with the stakeholders will be held on Wednesday to take a call on, among other issues, the long-pending demand to allow FDI through the automatic route.

Positive effect

The Centre’s decision to allow global trading companies to directly to take part in the auctions from this marketing season has already had a positive effect on the market sentiment with the bright grade tobacco getting an attractive price of ₹158.13 per kg, the medium grade ₹153.39 and the low grade ₹115.84, according to Tobacco Board sources.

The prohibition is applicable only to manufacture of cigarettes, cigars, cheroots, cigarillos of tobacco or of tobacco substitutes.

Pleading the case of ryots who were now rendered ‘captive growers,’ meeting the needs of domestic manufacturers and exporters, Virginia Tobacco Farmers Welfare Association president Ch.Seshaiah felt that major companies from across the globe, including European countries, were waiting in the wings to start their manufacturing units in the country where a minuscule group manufacturers and exporters rules the roost.

“It is unreasonable to ban FDI in tobacco sector when the Centre is vigorously pursuing second generation economic reforms and allowing FDI even in key sectors such as defence,” argued former Tobacco Board member Ch.Ranga Rao.

Livelihood concerns

“'There is no point in banning FDI when the parent companies of cigarette manufacturers such as Indian Tobacco Company(formerly Imperial Tobacco company) and Godfrey Phillips India have substantial stakes in their subsidiaries which dominate the Indian market,” M. Bangarababu, a felt former Tobacco Board member.

Even the countries which were signatories to the World Health Organisations Framework Convention on Tobacco Control, allowed FDI in the sector to protect the livelihood of farmers and farm labourers, said Acharya N.G. Ranga Kisan Samastha president Alla Venkateswara Rao.