The finance ministry is looking into various aspects of the manner in which the third-largest publicly traded cigarette maker, Japan Tobacco Inc, had brought in foreign investment into its Indian joint venture bypassing the requirement of raising equity.
The deal went past the Foreign Investment Promotion Board (FIPB) even as a ban on new FDI in the sector was being readied.
The ministry of corporate affairs and the Department of Industrial Policy and Promotion (DIPP) have now been asked by the ministry to go into the manner in which Japan Tobacco could manage to infuse $65 million (Rs 293 crore) in its joint venture here.
The transaction went through in March, a few days prior to the government banning any further FDI in manufacture of tobacco products. Subject to approval from the FIPB, 100 per cent FDI was allowed under the earlier laws.
The government of Japan holds a majority stake in Japan Tobacco, which a few years back had acquired the international business of RJ Reynolds, with its investments in India.
Japan Tobacco operates a joint venture in India, JT International (India), with the Mumbai-based Thakkar family, with each partner having 50 per cent stake. JTI (India) is in the red to the tune of Rs128 crore.