FDI Prohibitions Applies only to Manufacturing Tobacco Products and
not Wholesale Cash and Carry, Retail Trading which is Covered
by Respective Sectoral Policy
[RBI
Circular No. 02 dated 3rd July 2015]
Sub:
Investment in companies engaged in tobacco related activities
Attention
of Authorized Dealer Category-I (AD Category-I) banks is invited to Annex A of
Schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by
a Person Resident outside India) Regulations, 2000 notified vide Notification
No. FEMA.20/2000-RB dated May 3, 2000, and Notification No. FEMA.
242/2012- RB dated October 19, 2012.
2. In terms of
the above regulations foreign direct investment is prohibited in manufacturing
of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes.
3. It is
clarified that the prohibition applies only to manufacturing of the products
mentioned therein and foreign direct investment in other activities relating to
these products including wholesale cash and carry, retail trading etc. shall be
governed by the sectoral restrictions laid down in
the FDI policy framed by the Department Of Industrial Policy & Promotion, Ministry
of Commerce and Industry, Government of India and in the Schedule 1 of Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident outside
India) Regulations, 2000 as amended from time to time.
4. AD Category –
I banks may bring the contents of this circular to the notice of their
constituents and customers concerned.
5. The directions
contained in this circular have been issued under sections 10(4) and 11(1) of
the Foreign Exchange Management Act, 1999 (42 of 1999) and are without
prejudice to permissions / approvals, if any, required under any other law.