According to the MNCs, domestic farmers will stand to gain from their entry. That's assuming that these companies export either unmanufactured tobacco or cigarettes from India. But the lure of the market is precisely what is drawing the tobacco majors to India in the first place. It is the developed countries which are the growth regions for tobacco consumption.

In the advanced countries, tobaccocompanies are at the receiving end of consumer resistance, and they have had to cough up astronomical amounts as settlements in recent law suits. Exports of unmanufactured tobacco from India amounted to only about $245 million last fiscal. All that is likely to happen if foreign tobacco companies are allowed in is that the weaker Indian companies will be driven to the wall, or be gobbled up.

That is the reason why all the trade unions are up in arms against the proposal. Increased competition in the cigarette sector may not be a bad thing because of the very high market share of one company in the industry, giving it a dominant position. But the sector is not one in which the government needs to bend over backwards to attract investment.