Allow FDI in tobacco sector: dealers

The Tobacco Dealers Association has urged the Centre to allow foreign direct investment(FDI) and also contract farming in the tobacco sector to create market buoyancy for flue-cured tobacco.

Members of the association who met here on Sunday to suggest ways to the Union Commerce Ministry to step up export of tobacco felt that there was no rhyme or reason to deny FDI in tobacco sector when the Centre invited multi-national companies as part of ‘Make in India’ campaign to invest even in the strategic defence sector.

The Centre should also encourage contract farming by major global cigarette manufacturers so that the country was seen as a definite market for tobacco. The nation, at present, is seen only as an ‘opportunity market’ and this had led to farmers not getting a fair price for their produce, Indian Tobacco Association vice-president P.Venkatesan said while briefing newsmen on the day-long proceedings at the ITA convention hall.

A major global player, with a major share in tobacco trade in over 180 countries, had expressed keenness to do contract farming. But for various reasons the proposal had not fructified, he recalled, adding the Centre should rope in the Swiss-American multinational cigarette and tobacco manufacturing company to enter into agreement with the farmers for contract farming.

Demand for minimum guaranteed price

A major dealer in tobacco, Ch.Ravi Babu, urged the Tobacco Board to announce a minimum guaranteed price(MGP) for various grades of tobacco for the farmers to take a well-informed decision whether to grow the produce or not in a particular year.

When the market price ruled over and above the MGP, the farmers should be allowed to sell the produce to a dealer after paying cess on the lines of the Rythu Bharaso Kendram practice in the State.

The farmers had been turned into ‘captive growers’ meeting the demands of a select few cigarette manufacturers and exporters with a majority of over 600 dealers winding up their businesses due to alleged “anti-dealer” policies of the Tobacco Board, the dealers said and pressed for liberalising industrial licensing policy.

“The government should allow more players to manufacture cigarettes or ban manufacturing altogether,” they said, adding they should be allowed to purchase ‘crossed and no bid bales’ after paying cess to the crop regulator. No Goods and Services Tax should be imposed at the dealer level, they said.

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