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June 2010

Press Note No. 2 (2010 Series), dated 10-5-2010 — Review of the policy on foreign direct investment in the manufacture of cigarettes, etc.

By Pinky Shah, Sonalee Godbole, Gaurang Gandhi, Tarun Ghia, Brijesh Cholera, Pratik Mehta | Chartered Accountants
Sejal Vasa | Company Secretary
Reading Time 1 mins
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New Page 2

Part B : Indirect Taxes


Part C : RBI/FEMA

48 Press Note No. 2 (2010 Series), dated 10-5-2010 — Review
of the policy on foreign direct investment in the manufacture of cigarettes,
etc.

Presently, 100% Foreign Direct Investment (FDI) under the
Approval Route is permitted in the manufacture of cigars & cigarettes.

This Press Note prohibits with immediate effect FDI in
manufacture of cigars, cheroots, cigarillos and cigarettes of tobacco or tobacco
substitutes.

As a result, the consolidated FDI Policy — Circular No. 1 of
2010, dated March 31, 2010 stands modified as under :

“Para 5.7 relating to cigars & cigarettes, stands deleted.

In paragraph 5.1, which lists the sectors where FDI is
prohibited, a new entry below the entry

(i) is inserted as follows :

(j) Manufacturing of cigars, cheroots, cigarillos and
cigarettes, of tobacco or of tobacco substitutes.”

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