Final sign-off has yet to be given, but it looks likely that future foreign investment in the sector will be denied. “We are awaiting [the] finance ministry’s views on this matter,” KK Modi, the managing director of tobacco company Godfrey Phillips India, told the media. “Banning [investment] permanently will give a jolt to foreign players.”

The proposed ban has been controversial since Japan Tobacco announced its intentions to raise assets in a local company from 50% to 74%. BAT, the single largest shareholder in ITC at 32%, has consistently seen its plans of taking a controlling stake thwarted. Meanwhile, a $100m investment from Japan Tobacco has been pending for the past two years.


ITC, which has a 75% share in the Indian cigarette market, is set to be the major beneficiary of a ban.