The government today banned foreign direct investment (FDI) in cigarette manufacturing.

"FDI will be prohibited in the manufacture of cigarettes, whether it is for domestic consumption...or for exports," home minister P Chidambaram told reporters after the meeting of the cabinet committee on economic affairs (CCEA).

The prohibition will be notified, he said, adding the ban would also be applicable in the special economic zones.

The proposal was mooted by the department of industrial policy and promotion (DIPP) in the ministry of commerce and industry.

Under the existing norms, 100 per cent FDI is permitted in cigarette manufacturing, but an industrial licence is required and the proposals need to be approved by the foreign investment promotion board (FIPB).