Philip Morris flouted FDI rules in cigarettes

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  1. Philip Morris,the world’s largest tobacco company based in Japan has been found circumventing a nine-year-old government ban on foreign direct investment in the tobacco industry,
  2. In a bid to curb smoking,the Indian government had banned foreign direct investment on manufacturing in the tobacco sector in 2010.Although,it still allowed tobacco companies to invest through technology collaboration,licensing agreements and by forming a trading company.
  3. However, Philip Morris,the world’s largest tobacco company, allegedly made indirect payments to its manufacturing partner,Godfrey Phillips,to produce its Marlboro cigarettes.The Indian authorities thought that the Philip Morris had outsourced manufacturing to Godfrey Phillips on a contract basis.But in reality,the Marlboro maker had paid for and covered the costs of local manufacturing.
  4. India has 11.2% of the world’s total smokers.Tobacco use is one of the main risk factors for a number of chronic diseases, including cancer, lung diseases and cardiovascular diseases.More than 10 million die each year due to tobacco in India.