The National Institution for Transforming India Aayog is not in favour of a proposal to ban foreign direct investment in the country's tobacco sector, reported PTI. However, the Department of Industrial Policy and Promotion, which mooted this idea, has the Union Finance Ministry's support. An official said the DIPP is expected to discuss the plan with the Department of Commerce and NITI Aayog.

FDI is currently permitted in technology collaborations of any form in the tobacco sector. This includes licensing for franchises, trademarks, brand names and management contracts. However, foreign investments cannot be made for manufacturing cigars, cigarettes of tobacco and tobacco substitutes.

If the proposal is accepted, it will mean there would not be any possibility of indirect flow of overseas funds to the tobacco sector. The ban will also apply to foreign technology collaboration. Apart from NITI Aayog, major cigarette manufacturers are also reportedly not supportive of the proposed ban.

India is a signatory to the World Health Organisation's Framework Convention on Tobacco Control, which seeks "to protect present and future generations from the devastating health, social, environmental and economic consequences of tobacco consumption and exposure to tobacco smoke". All countries that are signatories to it are responsible for reducing the consumption of tobacco products.