Cigarette stocks today fell up to 18 per cent, led by Godfrey Phillips, following reports that the Union Cabinet is likely to consider a proposal to completely ban foreign direct investment (FDI) in the tobacco sector.
Shares of Godfrey Phillips India tanked 17.68 per cent, ITC fell by 2.94 per cent and NTC Industries went down by 0.65 per cent on BSE.
Government has been working on the proposal after tightening norms regarding pictorial warnings on cigarette packets.
The Commerce and Industry Ministry has forwarded the final cabinet note for the Cabinet's consideration, sources told PTI.
"Views of all the concerned ministries, including Health and Finance Ministry was included in the note," they said.
Currently, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contracts in the tobacco sector. However, it is prohibited in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes.
The proposal, if approved, may be a setback for domestic cigarette manufacturers.
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