FDI is prohibited 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.

Yours faith­ful­ly,

(A.K.Pandey)
Chief Gen­er­al Manager

RBI/2015–16/116
A.P. (DIR Series) Cir­cu­lar No.2

July 3, 2015