The Hindu Business Line : FDI in tobacco sector: Centre in no hurry

KNOWING THE GROWERS: The Union Minister of State for Commerce, Mr Jairam Ramesh, interacting with Ms Gemmela Tiko and other villagers of Gonduvalasa near Araku Valley in the Agency Area of Visakhapatnam on Thursday. On behalf of Girijan farmers, Ms Tiko recieved the second prize from the Coffee Board for producing best arabica coffee in non-traditional area. Mr Ramesh, who presented the awards in Bangalore in February, visited the village to interact with the farmers. - K.R. Deepak

Visakhapatnam March 30 Chances of the UPA Government allowing foreign direct investment (FDI) in the tobacco sector, a demand voiced by tobacco farmers, seem very remote, as tobacco is in the negative list and health concerns are also of paramount importance, according to Mr Jairam Ramesh, Union Minister of State for Commerce.

He was addressing presspersons in Visakhapatnam on Thursday after touring the coffee-growing areas in the tribal belt of Visakhapatnam district on Wednesday.

The Minister said the Coffee Board would promote coffee cultivation in the non-traditional area of Paderu in Visakhapatnam district, and double the area from 75,000 acres at present to 1.5 lakh acres in the next five years.

On allowing FDI in the tobacco sector, the Minister said last week, a delegation of tobacco farmers from Andhra Pradesh had met him as well as Mr Kamal Nath, Union Commerce Minister, and pleaded forcefully for FDI in the sector.

He said: "I told the delegation that in the first place it should be realised that tobacco was in the negative list and therefore, no Government would be in a hurry to allow FDI in the sector, as health concerns had to be taken into account. However, I could understand that the primary concern of the farmers in voicing such a demand for FDI was that in India one company was dominating the market and therefore, there was monopoly in procurement. I agree that it is not a healthy sign and therefore, ways and means have to be found to end such a monopoly. Electronic auction system could be one way and I have instructed the Tobacco Board officials in Guntur to study the possibility."

Giving his personal opinion, Mr Ramesh said FDI in the sector could be considered gradually.

Last resort?

"In the first phase, if any foreign investor wants to set up a 100 per cent export-oriented cigarette unit, procuring tobacco from our farmers, it could be allowed. Secondly, if any foreign tobacco company or leaf merchant wants to set up a tobacco processing facility, it could also be allowed. Only in the last phase should we think of allowing FDI in cigarette manufacture for the domestic market, after considering all the pros and cons," he explained.

Mr Ramesh also said that crop diversification in the tobacco-growing areas of Andhra Pradesh was of the utmost importance and in the next decade or so at least 50 per cent of tobacco area in the State should be converted to other crops.

"The Union Commerce Ministry will extend all help for such crop diversification and two bio-tech crops are coming up in Guntur and Prakasam districts," he said.

The enhancement of irrigation facilities by the Congress Government in the State would also induce farmers in AP, especially districts such as Prakasam, to give up on tobacco and switch over to other crops.

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