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Govt puts off decision on ITC plan to raise cigarette production

Byas Anand in New Delhi

The industry ministry has, for the present, put off a decision on ITC Limited's plea seeking to nearly treble the capacity at its Kidderpore facility.

The ministry has also decided to put in the cold storage amendment of the Industries (Development and Regulation) Act or the IDRA and announcement of a clear liquor and tobacco policies, official sources said.

The decision to this effect has been taken in view of the ensuing elections.

The ITC had proposed to increase capacity from 4.8 billion cigarettes to 12.25 billion cigarettes. The sources said the plea has been put on hold in tune with the policy decision of suspending fresh cigarette and liquor proposals till a new government was formed.

The ministry, it may be recalled, had earlier given a Letter of Intent to ITC for the capacity expansion. However, it has now decided not to convert the LoI into a licence.

The cigarette-to-hotel corporate major had sought permission for the expansion in December 1997. The LoI was issued despite opposition from several quarters, including health ministry and three independent organisations.

The company had invested nearly Rs 5 billion during the last three years towards upgradation and modernisation of its manufacturing and product development facilities of cigarettes and leaf tobacco.

However, its export of leaf tobacco suffered a setback during 1998-99 as a result of a glut in the international tobacco markets. To support export efforts, the company has also chalked out plans to upgrade green leaf tobacco processing facilities at an outlay of nearly Rs 3.5 billion.

The decision to reserve announcement of the liquor policy would mean further delay with regard to the several proposals which are pending approval for around a year now.

These include the proposed joint venture between Narang Industries and South African Breweries, the plea by Allied Domecq seeking okay for usage of molasses-based potable alcohol and Polychem's proposal to sell out to IDI in IDI-Polychem.

A German wine-maker Reh Kendermann Weinkellerei GmBH has also sought approval to set up shop in India to manufacture, process and bottle wines. A decision on this proposal is also pending.

UNI

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