Big Cigarette Cos Shut Production in Protest
ITC, Godfrey & VTS stop factory output; tobacco body estimates .₹ 350-cr loss per day, fears decision will promote illegal cigarette trade
Kolkata: The country’s largest cigarette makers, such as ITC, Godfrey Phillips and VST Industries, have decided to shut cigarette manufacturing from Friday due to ambiguity on the graphic health warning on tobacco product packs. This would result in a loss of about .₹ 350 crore per day in turnover, a news release from industry body Tobacco Institute of India (TII) said.
TII, which represents companies that account for more than 98% of the country’s domestic sales of duty-paid cigarettes, said the decision was made fearing potential violation of rules.
The ambiguity is related to the 85% graphic warning that cigarette packs must carry from this month under a government notification. A parliamentary committee, however, had last month recommended 50% pictorial warning on both sides of the cigarette pack. Until now, cigarette packs carried warning covering 40% of the front of the pack. “The Indian tobacco industry has written to the Ministry of Health and Family Welfare on March 15, 2016, seeking clarification on the matter,” said Tobacco Institute of India director Syed Mahmood Ahmad. The health ministry has yet to
Numbers Behind the Smoke
India’s legal cigarette industry has been facing a continuous drop in demand because of high taxation and the growth of duty-evaded illegal supply of OF DOMESTIC DUTY-PAID CIGARETTE SALES BY COS REPRESENTED BY TII STICKS BEING SOLD PER YEAR, AGAINST AN ESTIMATED 110 BILLION EARLIER
cigarettes, which also do not carry pictorial warnings. Since 2012-13, the excise duty on cigarettes, at a per-unit level, has gone up cumulatively by 118% with an increase in taxation in
every successive year.
As a result, cigarettes sold legally today represent only 11% of tobacco consumption in India. As per estimates, the cigarettes industry is down from 110 billion sticks sold per year to 95 billion sticks.
TII said the increase in pictorial warning will promote illegal cigarette trade and hurt the livelihood of 45.7 million people dependent on tobacco, including farmers, labourers and workers. It said tobacco control policies appear to be directed by the NGOs and anti-tobacco activists who are funded by organisations based in the US where till date there is no pictorial warning.
The body further said the top five tobacco producing countries, which account for 90% of global tobacco production, have an average warning size of 20% of the pack.