2 tobacco giants likely to invest Rs 400 cr in NE

NEW DELHI, August 19: The wind of investments blowing all over the country may have finally touched the Northeast following the exemption of central excise duty in the region. Two cigarette giants have submitted four proposals envisaging investments worth of over Rs 400 crore, of which Rs 313 crore are proposed to be invested in Assam. Just when the gloomy investments scenario in the Northeast was about to look up, the Centre's move to exempt excise duties in the region has been challenged, with the Tobacco Institute of India, an apex body of all tobacco manufacturers, questioning the justification behind the move pointing out that it would lead to loss of revenue for the government, besides encouraging antisocial activity in the r egion. They pointed out the case of Sikkim to buttress their claim where exemption had led to massive manipulation by many companies forcing the Centre to withdraw it. Even as protests are being raised, two cigarette companies, Godfrey Phillips and Indian Tobacco Company have submitted two proposals each with the secretary of industrial approval, seeking permission to set up manufacturing facilities in Assam and Tripura. If the Union government decides to issue fresh licences to the two companies then the region will see investments worth Rs 412.35 crore flowing into the Northeast. According to the proposal submitted by Godfrey Phillips, owned by the KK Modi Group, it will invest Rs 214.15 crore in the region. Its first proposal has envisaged investment of Rs 114.45 crore in setting up a manufacturing unit in Assam projected to produce 10,000 million cigarettes annually. The group has also proposed to set up another such manufacturing unit at Tripura, which will see an investment of Rs 99.7 crore, producing 7,500 million cigarettes annually. The second company, the Indian Tobacco Company proposes to invest Rs 198.2 crore. Its application mentioned that it envisages to invest Rs 99.1 crore in Assam and Tripura to set manufacturing facility producing 7,500 million cigarettes annually in each states. According to reports, the two cigarette giants' rationale behind such huge investments in the region is that excise duty in rest of the country is around 200 per cent, while it has been exempted in the Northeast. All the extra cost the companies have to bear is the transportation cost which is calculated to cost not more than 10 to 20 per cent, making investments in the region a highly profitable venture for the cigarette companies. However association of the tobacco companies put spanner in works by urging the Union government to withdraw the excise concession being given to the Northeast on the ground that it will lead to massive revenue losses for the government. More than this all sorts of illegal activities would plague the region harming the social well being of the people, they said. The Confederation of Indian Industry (CII) has welcomed the government's move but urged it to enact enough deterrent laws to prevent misuse of the exemption. The excise duty exemption being given relates to all goods produced in certain areas of Assam and Tripura, while exemption would be valid in all array of products in other states of the region. Sources said it was mainly because of the misuse of exemption of central Excise that the Union government had been holding back the permission.