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.

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.

Japan Tobacco said its Gallaher unit had agreed to pay 93 million pounds for taking part in anti-competitive practices during 2000 to 2003, before the Tokyo-based cigarette group bought the British tobacco company in 2007.

The other five groups, all retailers, were Wal-Mart-owned Asda, First Quench, One Stop Stores (formerly called T&S Stores), Somerfield and TM Retail, a statement by the British regulator said on Friday.

A number of the six parties had previously applied to the OFT for leniency and the total penalties the groups agreed to pay, if all leniency and early resolution discounts are given, is 132.2 million pounds, rather that the pre-discount penalties total of 173.3 million pounds, the OFT said.

The OFT did not say when a final decision on the level of fines would be taken.

The regulator added that supermarket group Sainsbury Plc was the first to apply to the OFT for leniency and will receive complete immunity if it continues to co-operate.

Investigations will continue against Imperial Tobacco Plc, Shell and retailers Morrisons, Morrisons-owned Safeway, Tesco and the Co-operative Group, the OFT said.

Imperial Tobacco said in a statement it had not admitted to any infringement of competition law and had not acted in any way contrary to the interests of consumers. It said it would continue to co-operate with the OFT. (Editing by Mike Elliott and David Holmes)

LONDON — Six retailers and tobacco firms have agreed to pay combined fines of more than 130 million pounds after admitting "unlawful practices" relating to retail tobacco prices, the Office of Fair Trading said.

Retailers Asda, Somerfield, First Quench, One Stop Stores and TM Retail plus manufacturer Gallaher agreed to pay 132.3 million pounds (165 million euros, 263 million dollars).

The fines come after the competition watchdog accused 12 firms of price-fixing, by either co-ordinating to link the price of some brands to rival products or exchanging proposed future retail prices between competitors.

An investigation into the six other firms named by the OFT three months ago — the Co-operative Group, Imperial Tobacco, Morrisons, Safeway, Shell and Tesco — is continuing.

OFT chief executive John Fingleton said in a statement Friday evening that companies should set their prices independently, to ensure the markets work well for consumers and the economy.

"The OFT is very pleased that the early co-operation of these parties has enabled the swift resolution of some of this case, which will significantly reduce the costs of pursuing the investigation for the OFT and the businesses concerned," he added.

The OFT investigation covered the period 2000-3. The companies which came to "early resolution agreements" led to a reduction in their fines, the watchdog said.

Even so, the Financial Times said Saturday the sum was still the biggest collective penalty the OFT had handed down.

The ruling Liberal Democratic Party’s annual tax commission is expected to review a proposal by key lawmakers that could more than triple the retail price of a pack of cigarettes to about $10.

The backers of the higher tax are looking at the additional revenue as a way to cut Japan’s ballooning budget deficit without taking the deeply unpopular move of raising its consumption tax.

Japan Tobacco Inc., which has a virtual monopoly on cigarettes here and is 50% owned by the government, argues that more-expensive cigarettes would depress sales and lead to lower tax revenue. The company, the world’s third-largest tobacco maker by volume after Altria Group Inc. and British American Tobacco PLC, on Tuesday sent executives to lobby the LDP against an increase.

"The government can’t hope for increased tax revenue, because such a big raise in the tax would mean consumption plummets," JT Deputy President Ryoichi Yamada said afterwards. "It’s unfair that smokers should have to bear the burden" of poor government finances.

Japan needs to boost government revenue to pay for pensions for its rapidly aging population. Government debt was 849 trillion yen ($8 trillion) at the end of March, equal to more than 160% of the country’s gross domestic product. One measure put forward to meet the shortfall is raising the 5% consumption tax. But consumers are sure to oppose that, and Prime Minister Yasuo Fukuda, already suffering from low approval ratings, has been reluctant to push the idea.

Many in Japan’s ruling party see higher tobacco tax as a promising alternative. In mid-June, about 45 lawmakers formed a bipartisan league to argue the case for higher taxes. One of its main advocates is LDP heavyweight Hidenao Nakagawa, former chief cabinet secretary and an opponent of raising the consumption tax.

The price of a cigarette pack in Japan is among the lowest in the industrialized world. On average, a pack costs about 300 yen, of which roughly 60% is tax. That is less than half of what a pack costs in New York and less than a third of what it costs in the United Kingdom.

These lawmakers argue that raising the cigarette tax would boost Japan’s tax revenue from the product, which was around 2.2 trillion yen for the year ended March 2008. If cigarette consumption remains unchanged, charging 1,000 yen a pack would increase cigarette-tax revenue by 8.5 trillion yen a year, according to Barclays Capital. But surveys show that as many as three-quarters of smokers say they would try to quit if cigarettes cost 1,000 yen a pack, though it’s unclear how many would succeed.

Health proponents, including the country’s physicians and Health Ministry, say an increase in cigarette taxes would cut down on health-care costs. Japan has one of the highest smoking rates in the industrialized world, at around 40% for men and 10% for women. Lung cancer is a leading killer among men.

The sweets, which look remarkably like a hand-rolled cigarette and packaged in replica cigarette packets are now accessible in some shops in Scarborough.

A Scarborough couple have brought it to the attention of the Evening News after witnessing, what they thought, was a child smoking.

John Palethorpe, of Maria’s Court, said: "The child, was with his mother and he was about nine-years-old. She was smoking and he had one of these cigarettes pretending to smoke – emulating exactly what the mother was doing."

He said he and his wife, Sandra, realised that it was a sweet and were then alerted to the fact that this type of sweet was available in Scarborough shops.

He added: "It is an absolute disgrace. The packets look so much like an American or European cigarette packet. It is diabolical that these should be allowed to be sold to children."

North Yorkshire Trading Standards said it was not illegal to sell the products.

Derek Smith, consumer services section leader, said: "Sugar ‘cigarettes’ and novelty ’smokers sets’ made from chocolate or liquorice, were common place at one time.

"As the public became more aware of the dangers associated with smoking tobacco, coupled with the health promotions to prevent children taking up the habit, the demand for these types of products waned.

"Recently there has been a trend for buying so-called retro candy such as aniseed balls and spangles. It’s unfortunate that chocolate cigarettes have re surfaced but it’s not illegal to sell them and it’s really up to retailers to decide whether or not it’s a product with which they wish to be associated."

Mr Palethorpe said: "This type of sweet is just encouraging children to smoke. Both myself and Sandra smoke and we believe it be the worst thing in our lives that we have ever done. We try to cut down, but it is hard. And now we both suffer from illnesses that are smoking-related."

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."

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.

Tobacco retailers estimate that the only way to earn money on stocks that will remain after that deadline will be to destroy them as then the State will return the excise tax paid on them.

Different State authorities have come up with different estimations on how large are the stocks held in cigarettes in Estonia at the moment. The Ministry of Finance estimates that the stocks should be enough until the end of summer while the director of Institute of Economic Research Marje Josing stated that nine months’ reserves have been imported to Estonia.

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

The Town Council voted 6-1 at its regular meeting to approved an ordinance creating a 25-cent excise tax on a pack of 20 cigarettes. Mayor Ray Ewing, Vice Mayor Joy Shull and councilmen Ronald Bowers, John Hollis, Lindel Fravel Jr. and Micheal Grim voted to approve the ordinance on the final reading. Councilman John Harter gave the dissenting vote.

"There were enough people in this town that didn’t like the idea, and somebody had to vote against it," Harter said, explaining his vote.

Bowers disagreed.

"I think it’s a fair tax because you’re putting it on an elected product," Bowers said.

Currently, four businesses within town limits sell cigarettes and would have to charge the tax. Sellers must display a cigarette stamp provided by the town. Taxes will be collected by the town treasurer. The tax per individual cigarette will be 1.25 cents, but the total revenue should be around $25,000, according to Town Manager Mike Kehoe.

In other business, the council:

* Adopted a resolution to address "Virginia’s transportation funding crisis," by which the town supports the efforts of the governor and the General Assembly "to act swiftly and decisively to approve legislation that will address the transportation funding crisis at the statewide, regional and local levels."

The resolution also states that such legislation should include new tax and fee revenue, including tolls on new highways, to ensure safe roads, ease congestion, promote economic development and provide consumer choices.

* Held a public hearing on the proposed 2008-2009 budget. No one spoke during the hearing. The total budget is proposed at $1.45 million, compared to $1.66 million for the current fiscal year. The council scheduled a June 12 special meeting at which they plan to vote on the budget.

Also, the council approved a motion extending the deadline to pay real estate and personal property taxes to June 30. Bills were to be due Thursday.

* Voted unanimously to award a contract to American Disposal Inc. for refuse collection. The contract is for one year at $101,192. Evergreen Waste Inc. currently provides the service for nearly $90,000 but submitted a bid of $125,881 for the next year, the second-highest of three bids.

* Voted unanimously to adopt a resolution requesting that the Virginia Department of Transportation reduce the speed limit on U.S. 11 (Valley Pike), 0.95 miles south of the previous town limits, from 55 mph to 45 mph.

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.

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