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NEW DELHI: Japan Tobacco International’s recent move to raise stake in its Indian subsidiary , JTI India, has lit up an old debate related to foreign direct investment in the tobacco or cigarette manufacturing business.

Should fresh FDI be permitted in companies that produce cigarettes? The current policy allows 100% FDI in the area, but subsequent governments have discouraged any new proposal on the ground that the policy cannot be implemented — it has been made void by a commitment made by former Union industries minister late Murasoli Maran in Parliament .

He had assured the House that FDI in tobacco products would not be permitted through issue of fresh licences as it concerned the health of the country’s citizens.

JTI, which owns powerful brands like Camel, Mild Seven, Gold Coast and Salem and launched the Winston brand of cigarettes last year, has proposed to increase its shareholding in its Indian JV from 50% to 74%. The company has said it is bringing in fresh money to restructure the JV with the Thakkar family. The JV company is currently in the red with accumulated losses of Rs 127.74 crore last fiscal.

Critics however, see this as a ploy by the foreign company to expand its business in India. A certain section of the society is of the opinion that if the foreign company is allowed to establish itself in the country, it will eventually promote smoking and also spread the ills that come with it, especially among the youth.

Smoking is injurious to the nation’s health, they argue. So far, so good. The problem however , takes a twist when a big Indian cigarettemaker also jumps into the fray, petitioning the government that the policy prohibits fresh FDI. And when influential members of Parliament also write to respective ministries, it is clear that bigger stakes are involved.

The policy allowing 100% FDI in cigarette manufacturing was announced in August 1998 when the late Sikander Bakht was the industries minister. Bakht’s argument was that since the policy was not on the automatic route, FDI would be permitted by the FIPB on a case-to-case basis.

Also, by way of another policy announced through Press Note 11 of 1998, it was stipulated that any new FDI case would require compulsory licensing under the Industrial (Development and Regulation ) Act of 1951. This implied that expansion of cigarette manufacturing capacities could easily be detected by the government and dealt with as per the merit of the proposal.

The policy to allow 100% FDI was hotly debated across the country as it was felt that it would open the doors to big foreign players to tap a potentially large market. It was soon put under test by a proposal of UK’s Rothmans of Pall Mall, which intended to set up a 100% Indian subsidiary. Around the same time, a plan by British American Tobacco to increase its stake in VST was also being fiercely debated.

When Maran became the industries minister, he chose not to clear any tobacco proposal and told the House that no fresh licenses would be issued. Clearly, if Rothmans had to come in, they required a fresh licence. The government kept the Rothmans’ case in abeyance untiland much to its comfort—it got merged with BAT worldwide and eventually withdrew the case the subsequent year. Since then, the government hasn’t received any FDI proposal, and so the fire remained doused.

With the policy in a limbo, local cigarette manufacturers got a fresh lease of life. While it meant the management of big companies like ITC could stave off any attempts by BAT to increase its hold on the company—BAT has a 33% stake in the Kolkata-based company—it also put a premium on licences.

But what if an existing license-holder wants to restructure his company by buying out a partner’s shares? In JTI’s case, for instance , the foreign company is only buying out shares of the Indian partner, which means that the existing JV will not see any fund infusion—the money goes to the Indian partner. The company has also made it clear that it has no plans to increase capacity.

It is learnt that the finance ministry is of the view that the proposal should be allowed because there is no fear of a capacity expansion in the current scheme. There’s no change in the promoters—only the Indian promoter’s stake gets diluted to 26%. The total equity capital of the company would remain the same. The health ministry is known to have serious issues with tobacco per se, and so it is likely to oppose the deal as well. The department of industrial policy and promotion supported the deal in the last meeting of the FIPB.

The fear however is that once the proposal is cleared, it may once again prompt foreign cigarette makers to try and up their ante in the Indian market by acquiring or attempting to acquire more shares in Indian companies. This could lead to increasing sales of locally-manufactured cigarettes and also of contraband cigarettes, especially of those brands which gain popularity in India.

But at the same time, the government while considering JTI’s proposal, should keep in mind that policy decisions should not be tweaked in the interest of any particular company or group of companies. It has to take a final call on whether the policy of 100% is valid or not.

If it is, it should then take a call on whether the current proposal would lead to propagation of smoking or is it only to better the health of a company the government once allowed to invest in India. If we are committed to the health of our citizens , a blanket ban on cigarette manufacturing is an ideal scenario.

Least we can do is to implement policies like ban on smoking in public places in their true spirit. If we can’t take the call owing to reasons that include the huge revenues cigarette manufacturing generates, we’d do well to be judicious.

BILLINGS - During the past few weeks, cigarettes have started two separate fires in Billings, but officials say that shouldn’t been happening.

Montana Legislators passed a law requiring all cigarettes sold in Montana to be fire safe. That means any cigarettes sold in the state shouldn’t smolder or start a fire after being used.

Billings Police Sergeant Kevin Iffland says enforcement of the new law lies with the state. "That’s where the enforcement comes in, it’s through the Department of Revenue and their agents. They have to make sure the businesses that have the license to sell cigarettes are selling the proper brands and fire safe labels," said Iffland.

The new law went into effect on May 1, 2008.

Cigarette vending machines and packets of 10 could be outlawed under government plans aimed at preventing children and young people smoking.

The plans, which include banning branding and logos, apply to England, Wales and Northern Ireland. Similar plans have been unveiled in Scotland.

Smokers’ lobby group Forest said there was "no evidence" to show the plans would to cut smoking in young people.

Meanwhile, a new TV advert campaign is targeting parents who smoke.

The adverts warn that children of smokers are three times more likely to take up the habit than those of non-smokers.

Under current pricing, a packet of 10 cigarettes cost about £3, compared to nearly £6 for 20.

Last week the Scottish Government announced a range of proposals to restrict tobacco sales in Scotland - including a ban in shops from displaying cigarettes in "pride of place" on their shelves.

On the latest consultation document, Public Health Minister Dawn Primarolo said it was vital to take away temptation from children.

"Protecting children from smoking is a government priority and taking away temptation is one way to do this," she said.

"If banning brightly coloured packets, removing cigarettes from display and removing the cheap option of a pack of 10 helps save lives, then that is what we should do, but we want to hear everyone’s views first."

Imperial Tobacco Group Plc, Europe’s second-largest publicly traded cigarette maker, plans to cut 2,440 European jobs after buying Altadis SA for 12.6 billion euros ($20 billion) earlier this year.

Six of 58 factories will shut as staff numbers fall by about 6 percent, Imperial said today. The plants slated for closure are located in its hometown of Bristol, England, as well as Spain, France, Germany and Slovakia. The maker of Davidoff cigarettes fell 3.3 percent in London trading as the plan failed to persuade some analysts to lift their savings estimates.

Western European tobacco companies have eliminated jobs as governments restrict smoking and advertisements. Gareth Davis, Imperial’s chief executive officer since the company was spun off from Hanson Plc in 1996, has beat cost-savings goals consistently since the cigarette maker bought German rival Reemtsma in 2002 and then cut 4.4 percent of its jobs.

Expectations for today’s announcement “got carried away,'’ wrote Jonathan Leinster, an analyst at UBS in London, who repeated his “sell'’ rating on the stock today. He left his savings estimates unchanged and said he’s “not satisfied'’ with expense reduction related to the Altadis merger.

Almost half of the job cuts, or 1,060 positions, will take place in France, equating to almost a quarter of Imperial’s local payroll. The company stuck to forecasts for expenses of 600 million euros for the reductions and plant closings and annual cost savings of 400 million euros by the year through September 2012.

Shares Retreat

Imperial fell 64 pence to 1,879 pence in London trading. The stock has declined 20 percent in 2008 after rising more than sixfold in the prior eight years.

The cigarette maker will need to negotiate with unions over the job cuts and gain approval from the French and Spanish governments. Plans to reduce payrolls have sparked strikes this year by French workers from hospital staff to employees of newspaper Le Monde.

“They’re brutally tearing the company apart,'’ Jorge Tome, a representative of Spain’s Comisiones Obreras union, said in an e-mailed statement. “Once again they’re showing that the only thing that counts is profit and not a social commitment.'’

The takeover of Madrid-based Altadis added about 27,000 employees to Imperial’s work force. The Iberian company, which was formed when Spain and France merged their tobacco monopolies in 1999, makes cigarettes under brands including Gauloises and Gitanes and also is the world’s largest cigar manufacturer.

Toronto - Thanks to a new law, which came into effect over the weekend, cigarettes are no longer visible to customers at stores across Ontario.

The new law requires stores to keep the packages out of view.

“This marketing tool … is a wall of temptation for smokers who have made the decision to quit,” said Joanne Di Nardo, spokeswoman for the Ontario Tobacco-Free Network. “Well-documented research and evidence shows that these retail display stands increase tobacco sales by 12 percent to 28 percent.”

When asked how it has effected sales so far, one store in Toronto told EON, “oh…people just laugh….hasn’t stopped anyone from buying their smokes.”

Other provinces are expected to implement a similiar program

More people are killed in fires started by unattended cigarettes in the United States than any other kind of fire. Those numbers, however, may drop thanks to a new kind of cigarette.

They are called "fire-safe" cigarettes. Legislators are expected to pass a law that would prohibit the sale of any other kind of cigarette in Hawaii.

The latest numbers from the National Fire Protection Association show cigarettes started more than 82,400 fires in the U.S. in 2005. Those fires killed 800 people and injured more than 1,660 people.

The most common fuel for those fires … mattresses. People fall asleep in bed while smoking and some mattresses burn very quickly.

So a new generation of cigarettes has been developed.

They are called "fire-safe" cigarettes, or LIPs which stands for low ignition propensity.

"It’s a cigarette that when you don’t smoke it, you’re talking … you set it down, it’ll go out. It won’t keep burning like traditional cigarettes do," said Christopher Maxwell, who owns a store called Tobaccos of Hawaii on Atkinson Street.

LIP cigarettes are made with bands of thicker paper. Those bands act like speed bumps to slow the burn making them less likely to start fires.

If legislators pass the proposed "fire-safe" cigarette bill as expected, LIP cigarettes will be the only kind of cigarette you will be able to buy in Hawaii beginning Oct. 1, 2009.

Maxwell already sells lots of the "fire-safe" smokes.

"No one’s given me any negative feedback. There’s obviously no flavor difference. Most people don’t even know it’s going on. Virtually the entire cigarette industry is going to LIP cigarettes," Maxwell told KGMB9.

A spokesman for the Honolulu Fire Department said LIP cigarettes are a step in the right direction, but smokers still need to adhere to safety rules. Never smoke in bed. Smoke outside instead of indoors. And keep matches and lighters out of sight and reach of children.

AUGUSTA — Health groups urged lawmakers Wednesday to increase the cigarettes tax by a $1 per pack, saying the increase will encourage more people to quit smoking and generate more money for health programs.
Health Policy Partners of Maine, which includes heart, lung and cancer groups, also announced survey results that show 76 percent of Mainers support a cigarette tax increase.
"Maine people understand the importance of high tobacco prices and are counting on their state legislators to use this powerful tool to reduce the physical and financial toll of tobacco use," said Ed Miller, CEO of the American Lung Association in Maine.
If Maine increases the state cigarette tax from $2 to $3 per pack, it would be the highest state tax in the country. Miller said other states, such as New York, are also considering tobacco tax increases.
The announcement came just one day after Gov. John Baldacci said he would support increasing the cigarettes tax to help pay for the state’s Dirigo Health program. Last year, Baldacci proposed a $1 per pack increase as part of the budget, but it was rejected by lawmakers.
This time around, House Majority Leader Hannah Pingree, D-North Haven, is sponsoring a bill to make changes to state health insurance laws in an attempt to lower the cost of health care in the state. Her bill includes a 50-cent-per-pack tax increase on cigarettes to help fund Dirigo Health, the state’s insurance program for individuals and small businesses.
Miller and others who gathered in the Statehouse Hall of Flags said they would support using some of the money for Dirigo Health and the rest for other health-related programs. "This is health policy," Miller said. "It’s not tax policy."
On the other side of the issue, smokers who stopped by the Maine Smoke Shop in Augusta said they feel singled out by the state. "I think they ought to back off the smokers for a while and go after the drinkers," said Charles McKenney, of Augusta. Sheila Tondreau, also of Augusta, said a tax increase is not a good idea.
"It’s always us that gets hit," she said. "You don’t see them taxing all these other people." Chris Jackson of the Maine Oil Dealers Association said convenience stores represented by the association have been hurt by past tobacco tax increases. "For small retailers, this is not about smoking or Dirigo Health, it’s about trying to stay competitive with our counterparts in New Hampshire," he said.
Jackson said convenience store owners with shops in Maine and New Hampshire saw cigarette sales drop here but increase in New Hampshire after the last tax hike. In 2005, Maine lawmakers set the current tax at $2 per pack. Jackson also said cigarette taxes are not a stable source of funding. "We think it’s unfair to mislead people to think Dirigo Health would have a reliable source of funding if the tobacco tax passed," he said.
Members of the health coalition said increasing the tax by another dollar will bring in an additional $64 million a year in revenue to the state. In addition, they say it will compel some people to stop smoking because they can no longer afford it, and that it will cut health care costs caused by smoking-related illnesses. "This is about Maine’s future," said Megan Hannan of the American Cancer Society. "We need to raise the price of cigarettes as soon as possible."