The Hindu Business Line : `Cigarette imports under OGL may hit farmers'

IMPORT of cigarettes under the Open General Licence (OGL), coupled with concessions under free trade agreements/bilateral treaties, may threaten the demand for local tobacco. This could adversely affect Indian tobacco farmers, fears the Tobacco Institute of India.

Cigarette imports are now free under OGL and customs duty is only 30 per cent. Such terms of trade create a demand for foreign cigarettes and also go against the Union Government's objectives of strict tobacco control in the domestic market. The Cigarettes and Other Tobacco Products Act, 2003 was enacted by the Union Government to restrict the marketing and sales of tobacco products.

Under the Industrial Development and Regulation Act, 1951, cigarettes have remained one of the six commodities for which compulsory licensing is still required, while the Foreign Direct Investment (FDI) Policy does not permit investment in tobacco.

In such a scenario, the institute contends that cigarettes should be removed from OGL to the restricted list under the Export-Import (Exim) Policy and the customs duty rate should be raised to the permissible World Trade Organisation-bound rate of 150 per cent. Cigarettes should also be excluded from free trade agreements/ bilateral treaties.

Though the value of tobacco exports increased during 2003-04 compared to the previous year, the institute has observed that this sector lacks a strong and growing domestic base, which is essential for providing the required incentive for exports. It recommends a proactive EXIM policy for augmenting tobacco exports.