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Vishwanath Kulkarni

MYSORE, May 6

THE Tobacco Institute of India (TII) has called for an end to the discrimination against cigarette tobaccos.

Mr A.C. Sarkar, Director, TII, said the discriminatory taxes, both at the Central and State level, legislation banning smoking in public places and smuggling will almost totally reduce tobacco demand for the domestic crop. He was speaking at the TII awards ceremony here.

The Centre's proposed tobacco legislation focuses only on cigarettes, while nearly 84 per cent of tobacco consumed in other forms escapes restrictions, he said.

Cigarette accounts for only 14 per cent of tobacco consumption in India, contributes 80 per cent of the excise duty collection and forms nearly 85 per cent of exports from tobacco.

Cigarettes are subjected to punitive and discriminatory taxation, which is 21 times more than that on bidis and 17 times greater than chewing/other tobaccos. This has encouraged contraband cigarette sales.

According to reports, contraband cigarettes now account for eight per cent of domestic cigarette demand, valued at Rs 2,000 crore and is growing at 20 per cent per annum, he added.

Even State taxes discriminate against cigarettes, he said. Most State taxes are levied only on smoking tobacco products leaving 37 per cent of tobacco consumption, which is in non-smoking form, untouched.

"This unwarranted discrimination has led to a continuous decline in domestically manufactured cigarettes -- volumes dropped by a cumulative eight per cent over three years in 2000-01 and plummeted a further 10 per cent in 2001-02,'' he said.

Tobacco generates 12 per cent of India's total excise duty collections and accounts for four per cent of the value of agri-exports. It provides direct and indirect employment to about 35 million people.

While the worldwide public concern about tobacco is justifiable, one cannot snap the lifeline of 35 million people and break the agricultural backbone of lakhs of farmers, he said.

The Parliamentary Committee's proposed ban on storage, sale and distribution of tobacco products within a radius of 500 yards of specified places, if implemented, will spell doom for the industry as virtually all the tobacco sales will be outlawed, Mr Sarkar said.

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