Philip Morris entered India in the late 1960s by acquiring a majority stake in the London-based parent of Godfrey Phillips India Ltd. It gradually reduced its stake in Godfrey over the years, in part due to regulatory changes.
Ahead of the 2010 ban on investments into cigarette manufacturing, Philip Morris formed a new wholesale trading company with Godfrey and an investment firm.
Under the current arrangement, Godfrey manufactures Marlboros while Philip Morris' trading firm helps promote them.
That part of its operations would not necessarily be impacted by the foreign investment changes being considered, as such changes usually do not apply to previous arrangements.
However, if the new rules were implemented, Philip Morris' future investment plans in India would be in jeopardy, as any form of new investment or collaboration would be outlawed.
Those plans, the company says, include the possible launch of its heat-not-burn electronic cigarette called iQOS, an alternative product which Philip Morris sees as a key step towards a smokeless future that could also bring health benefits to India. [nL8N1DV29V]
Godfrey did not respond to a request for comment.
India is a key market for Philip Morris.
Even before the company contemplates introducing alternative products there, demand is strong for conventional cigarettes that still account for most of the company's $74 billion in global annual revenues.
The number of male cigarette smokers, aged between 15 and 69 years, almost trebled in India to 40 million between 1998 and 2015, according to BMJ Global Health estimates. Another 48 million smoke traditional hand-rolled cigarettes, called beedis.
Marlboro faces stiff competition from premium brands of India's largest cigarette maker, ITC Ltd <ITC.NS>, which is part-owned by British American Tobacco (BAT) as well as several state-run firms.
Still, its market share has doubled between 2012 and 2015 to 1 percent, data from Euromonitor International show.