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Govt checkmates DS Group’s cigarettes gambit; set to curb fag imports  DS group, a trend-setter in the fast moving consumer goods (FMCG) sector, has a picture of chess board on its website with catchline 'winning moves across the board'. It might well now have to add 'cigarettes manufacture' as a disclaimer to its winning streak.  The Group's proposal to manufacture cigarettes in Assam has been stonewalled by all the concerned ministries in the Indian Government.

The Department of Industrial Policy and Promotion (DIPP) in the Ministry of Commerce & Industry has strongly pitched for rejection of Dharampal Satyapal Limited’s (DSL’s) application for industrial licence to set up a unit at Guwahati in Assam. The Rs 352.21-crore project is conceived to produce 25,000 million cigarettes per annum and provide employment to 2859 persons. In October this year, a ray of hope emerged for DSL at an inter-ministerial forum named Industrial Licensing Committee (ILC). The Committee observed that import of cigarettes was allowed under open general licence (OGL). ILC thus asked DIPP’s Consumer Industry Division (CID) to reconsider its stance against grant of industrial licence.

CID has now logically countered this implicit line of argument in favour of industrial licensing. It has also made a strong case for shifting cigarettes from OGL to restricted list of imports under the Foreign Trade Policy.
An official told NM Leo News that “the present import regime is extremely protective” to domestic manufacture as there is “deterrent import tariff” of as high as 60% ad valorem per thousand units (Tu) of cigarette sticks. The present excise duty on cigarette, on the other hand, is as low as 16% per Tu.
CID  believes that this “extremely liberal” tax for indigenous manufacture “may cause easy availability” and an increase in consumption of cigarettes and similar products.
A search through an official website for calculation of customs duty shows that the total import duties inclusive of 60% basic customs duty on cigars and cheroots aggregate to 88.839%. Similarly the total import duties on filter cigarettes add up to 36.136% per Tu.   
The official said that DIPP has already advised the Commerce Department to shift import of cigarettes from OGL to Restricted List (RL). He explained: “Since the manufacture of cigarettes is compulsory licensing, putting import of cigarettes under RL will make the two policies consistent with one another.”
DIPP has also suggested a slew of additional initiatives to regulate import. These include stipulating certificate requirement of exporting country, import inspection, quantity control measures, pre-shipment inspection and rules of origin. 
It had last year reminded ILC that no industrial licence for cigarette manufacture has been granted since 1999 on health grounds. DIPP has also banked on the fact that Ministry of Health and Family Welfare has enacted the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade & Commerce Act to caution the public about the health hazards of tobacco consumption. 
In October 2012, Finance Ministry had expressed its surprise over ILC Secretariat’s decision to list DSL’s application for consideration. An official of Department of Economic Affairs recalled that while mooting a ban on FDI in tobacco sector in 2010, DIPP had affirmed that no licence had been issued since 2000.
DSL , which has been producing chewing tobacco products since 1948, is late aspirant for the cigarette business. It did not even join the corporate rush at the turn of the century for setting up cigarette projects in Northeast to avail the excise wavier. 
Several companies had applied for permission to set up 22 cigarette units in the Northeast during August 1999 to April 2001. ILC, at its meeting held in November 2005, decided to reject all the pending 22 applications envisaging creation of total capacity of 216,540 million cigarettes per annum. 
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