FDI seen as major threat to tobacco, cigarette industry

The delegation reminded the two ministers that it was the multinational companies (MNCs) that had hijacked the vast Russian tobacco market from the exporters.

Garimella Seetharamaiah, the president of Nellore and Prakasam Districts Tobacco Growers' Association, and Chinta Venkateswara Rao, the president of Krishna District Tobacco Growers' Association, who were the members of the delegation, told Business Standard that the delegation had expressed concern that the FDI entry into the tobacco sector and the cigarette industry would be detrimental to the farmers' interests.

They charged the MNCs with putting tobacco growers to heavy losses on a number of occasions in the past.

"The British Chamber of Commerce issued an incentive letter to our Tobacco Board in 1992-93, promising that its members would buy around 120-140 million kg from our suppliers. Based on that assurance, our farmers raised tobacco in surplus lands. Later, the British chamber went back on its word, and did not purchase tobacco from us. Our farmers were ruined economically," Seetharamaiah recalled.

"In 1993-94, RJ Reynolds purchased Navbharat Factory in Hyderabad. Instead of manufacturing cigarettes in the factory, Reynolds kept it idle. At last, Reynolds sold that factory to Japan Tobacco Company. Even in the past, many foreign companies, except ILTD and British Indian Tobacco Company (BITC), did not buy tobacco directly from our farmers. Instead, they bought tobacco from select dealers, that too in little quantities. They did not show any concern for our tobacco or farmers. Their motto had always been to buy Indian tobacco at cheap rates," he alleged.

Citing Monsanto and Terminator as recent examples, Seetharamaiah said that the two foreign firms sold away tobacco seeds at Rs 1,500 a kg. "Those seeds did not germinate well, and gave poor yields. Enraged at the poor yields, the Karnataka farmers, who had used Monsanto seeds, burnt the crop before its offices. On the contrary, The quality seeds supplied by the Rajahmundry-based Central Tobacco Research Station (CTRI) at Rs 150 a kg gave higher and quality yields," he claimed.

"If MNCs were allowed into our tobacco industry, they would buy tobacco, but seldom export it. Instead, they would manufacture cigarettes and sell them here, thus destroying the domestic cigarette industry. Hence our opposition to the FDI in the tobacco sector and cigarette industry," they reiterated their stand.