The Hindu Business Line : Deveshwar opposes FDI in tobacco sector

THE Chairman of ITC, Mr Y.C. Deveshwar, has opposed the entry of foreign companies into the Indian tobacco sector and said, "It will harm the interests of Indian farmers''.

He was speaking at an interaction session with farmers at the Central Tobacco Research Institute here on Saturday, on the first day of its annual four-day staff research council meeting here.

Mr Deveshwar was responding to the pleas of tobacco farmers from Andhra Pradesh to take the lead in ensuring remunerative prices for the crop.

"I do not know how the demand for allowing the FDI has sprung up and I am surprised that some farmers' representatives are also voicing such a demand. Please understand that it won't be for the good of the Indian farmer or Indian trade,'' he said.

Describing ITC as "a friend and partner of the Indian farmers'', he said the company was truly Indian in spirit and character and that was why it was opposing FDI.

There was a basic distortion in the Indian market caused by the taxation regime, he said. "Because cigarette industry is organised and therefore it is easy to tax it and collect revenue from it, the Government is overtaxing it. Cigarette tobacco, which accounts for only 14 per cent of the total tobacco consumption in the country, contributes 85 per cent of the revenue. All other tobaccos — bidi tobacco, chewing tobacco and country tobacco — are let off. In the name of protecting public health, the Government is imposing such crippling taxes on the industry,'' he said. He urged farmers to bring pressure on the policy makers to change the tax regime. "You have votes. The ITC doesn't have votes. Please organise yourselves and exert pressure on the Government to be more moderate in taxing cigarettes,'' he said. He said for the past two years the Centre had not increased taxes on cigarettes, but the States were imposing different types of taxes and "Andhra Pradesh, which has the highest number of tobacco growers, is setting a bad example. Luxury tax is imposed in this State. I have already spoken to the Chief Minister about it. Furthermore, the restrictive provisions on cigarettes are more stringent in Andhra Pradesh. In fact, the Andhra Pradesh law is even more rigorous than the central law,'' he said.

He urged farmers to produce quality tobacco, increase the yields and reduce the cost of cultivation with the help of the scientists and make Indian tobacco competitive in the world market. He said ITC's activities were not confined to tobacco alone and it was dealing in different agri-commodities. It had set up 2,200 e-kiosks in non-tobacco growing areas and 100 in tobacco areas to help farmers in the rural areas.

"It is our aim and ambition to cover 1 lakh villages in the next five to seven years and take IT to rural areas to facilitate easier extension,'' he added.

Dr. K. Deo Singh, Director of the CTRI, earlier in his welcome address said that the country had risen to the second position in tobacco production and third position in exports during 2002-2003. "The future is bright for our tobacco, as it has the lowest nicotine content and the cost of cultivation is the lowest in India,'' he said.

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