Tobacco industry taxed by policies: TII director

Director of the Tobacco Institute of India (TII) Syed Mahmood Ahmad said that the legal cigarette industry has come under tremendous stress in recent times due to escalating taxes and extreme tobacco control regulations. He appealed to the government to intervene by adopting balanced and evidence-based tobacco policy.

Addressing a gathering during the 18th annual TII Tobacco Farmers' Award ceremony in the city on Saturday, he said that India is the second largest producer of tobacco in the world, providing livelihood to 45.7 million people.

"Tobacco products generate a significant share of the country's revenue, amounting to over Rs 34,000 crore annually. In addition, foreign exchange earnings through exports of tobacco and tobacco products garner around Rs 6,000 crore per annum. No other country in the world, unlike India, has such a huge and widespread dependence on tobacco crop for livelihood," he said.

Ahmad said the excessive taxation on cigarettes has given a huge boost to smuggled cigarettes and has opened the floodgates for contraband cigarettes at both premium as well as value-end of the market.

"An increase in the tax arbitrage available to tax-evading operators provides an enormous boost to smuggling syndicates and severely undermines the legal cigarette industry, adversely impacting tobacco farmers and revenue objective of the government," he said.

"The thriving illegal cigarette trade, which now accounts for 1/4th of the cigarette industry in India, is not only causing substantial revenue loss to the government, but is also affecting the livelihood of tobacco farmers, as smuggled cigarettes do not use domestically produced tobacco," Ahmad said.

He said extreme regulations and a high taxation policy will never control overall tobacco consumption. "It only compounds the distress of the legal industry as lakhs of farmers dependent on it. Hence, policy makers should recognise the huge livelihood-dependency on tobacco and the significant contribution of the legal industry to the exchequer, while making policies regarding tobacco," he said.

"The prosperity of Indian FCV tobacco farmers is inextricably linked with the domestic cigarette industry. It is indeed to strike a balance between the country's excessive cigarette taxation and regulations and the livelihood of people," he said.

He was of the opinion that a balanced approach will protect the livelihood of lakhs of FCV tobacco farmers by combating the surging illegal cigarette trade.