 "Cigarette makers shut shop over graphic warning rule")
Cigarette makers, including ITC and Godfrey Phillips, have halted production, to protest a new rule on pictorial health warning. This is resulting in an estimated loss of Rs 350 crore per day.
"Members of the Tobacco Institute of India (TII) that account for more than 98 per cent of the country's domestic sales of duty-paid cigarettes in India, have unanimously decided to shut all their cigarette factories from April 1 (Friday). Owing to ambiguity in the policy related to the revision of graphic health warnings on tobacco product packs, the members are unable to continue manufacturing cigarettes," TII said.
TII is a representative body of farmers, manufacturers, exporters, and ancillaries of the cigarettes' segment of the tobacco sector.
The sector said the move would affect at least 60 per cent of the 450 million people who are daily-wage earners and will be put out of business as production halts in factories.
TII said the '85 per cent of packaging surface' pictorial health warnings would promote illegal cigarette trade in the country.
The health ministry had issued a notification on September 24, 2015, prescribing larger pictorial warnings on tobacco products under the Cigarettes and Other Tobacco Products (Packaging and Labelling) Amendment Rules, 2014, which comes into force from April 1. Currently, pictorial warnings are at 40 per cent of packaging surface.
The ministry had also made a commitment in the Rajasthan high court on March 28 that all tobacco products made April 1 onwards would carry larger pictorial health warnings.
Though the government had proposed increasing pictorial warnings to 85 per cent of packaging surface, a parliamentary panel had suggested 50 per cent, which resulted in a stir among health experts and non-government organisations (NGOs).
Cigarette manufacturers say larger pictorial warnings would not reduce consumption but only work against the domestic sector.
"Cigarettes smuggled into the country hardly have graphical warnings. In some, there is hardly any picture and only a statutory warning appears," a sector official said, adding that if domestic production halts, consumption of these illegally imported cancer sticks would increase, resulting in revenue loss for the sector and the government.
Illegal cigarettes come mainly from Indonesia, China, Pakistan, Bangladesh and South American countries.
"Consumers may think that packs with smaller warnings may be safer," a cigarette manufacturer said. The share of legal cigarettes in overall tobacco consumption has declined from 21 per cent in 1981-82 to 11 per cent in 2014-15, even though overall tobacco consumption increased in India, a source said.
Data suggest that illicit trade results in an annual revenue loss of Rs 9,000 crore to the national exchequer.
The TII has said tobacco control policies in India appear directed by NGOs and anti-tobacco activists funded by foreign vested interests.
"The top five tobacco producing countries, which account for 90 per cent of the global tobacco production have an average warning size of 20 per cent", a cigarette maker said..
With the total annual cigarette industry production pegged at 300 million tonne (mt), a day's loss would result in a loss of less than a million tonne. "Cigarettes comprises of 11 per cent of the total tobacco variants consumed in India but value-wise it is a major revenue contributor," an industry source said.
The environment for cigarette makers had become increasingly challenging with steep taxation.
In the last three and a half years, the incidence of excise duty and VAT on cigarettes at a per unit level had gone up 98 per cent and 124 per cent respectively which is impacting volumes. Larger pictorial warnings would further exert pressure.
"Members of the Tobacco Institute of India (TII) that account for more than 98 per cent of the country's domestic sales of duty-paid cigarettes in India, have unanimously decided to shut all their cigarette factories from April 1 (Friday). Owing to ambiguity in the policy related to the revision of graphic health warnings on tobacco product packs, the members are unable to continue manufacturing cigarettes," TII said.
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TII is a representative body of farmers, manufacturers, exporters, and ancillaries of the cigarettes' segment of the tobacco sector.
The sector said the move would affect at least 60 per cent of the 450 million people who are daily-wage earners and will be put out of business as production halts in factories.
TII said the '85 per cent of packaging surface' pictorial health warnings would promote illegal cigarette trade in the country.
The health ministry had issued a notification on September 24, 2015, prescribing larger pictorial warnings on tobacco products under the Cigarettes and Other Tobacco Products (Packaging and Labelling) Amendment Rules, 2014, which comes into force from April 1. Currently, pictorial warnings are at 40 per cent of packaging surface.
The ministry had also made a commitment in the Rajasthan high court on March 28 that all tobacco products made April 1 onwards would carry larger pictorial health warnings.
Though the government had proposed increasing pictorial warnings to 85 per cent of packaging surface, a parliamentary panel had suggested 50 per cent, which resulted in a stir among health experts and non-government organisations (NGOs).
Cigarette manufacturers say larger pictorial warnings would not reduce consumption but only work against the domestic sector.
"Cigarettes smuggled into the country hardly have graphical warnings. In some, there is hardly any picture and only a statutory warning appears," a sector official said, adding that if domestic production halts, consumption of these illegally imported cancer sticks would increase, resulting in revenue loss for the sector and the government.
Illegal cigarettes come mainly from Indonesia, China, Pakistan, Bangladesh and South American countries.
"Consumers may think that packs with smaller warnings may be safer," a cigarette manufacturer said. The share of legal cigarettes in overall tobacco consumption has declined from 21 per cent in 1981-82 to 11 per cent in 2014-15, even though overall tobacco consumption increased in India, a source said.
Data suggest that illicit trade results in an annual revenue loss of Rs 9,000 crore to the national exchequer.
The TII has said tobacco control policies in India appear directed by NGOs and anti-tobacco activists funded by foreign vested interests.
"The top five tobacco producing countries, which account for 90 per cent of the global tobacco production have an average warning size of 20 per cent", a cigarette maker said..
With the total annual cigarette industry production pegged at 300 million tonne (mt), a day's loss would result in a loss of less than a million tonne. "Cigarettes comprises of 11 per cent of the total tobacco variants consumed in India but value-wise it is a major revenue contributor," an industry source said.
The environment for cigarette makers had become increasingly challenging with steep taxation.
In the last three and a half years, the incidence of excise duty and VAT on cigarettes at a per unit level had gone up 98 per cent and 124 per cent respectively which is impacting volumes. Larger pictorial warnings would further exert pressure.
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