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Godfrey Phillips said that it was in compliance with the India’s foreign direct investment (FDI) rules.They said that they had entered into a commercial arrangement with Godfrey Phillips to manufacture Marlboro cigarettes in 2009,a year before the 2010 FDI ban.
Philip Morris,the world’s largest tobacco company based in Japan had been found circumventing a government ban on foreign direct investment in the tobacco industry,
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.
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.