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

The Economic Times - - Companies - Our Bureau

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

re­spond.

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.

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