Drug makers want lower GST on nicotine gums, say 18% impedes health policy

Currently, nicotine polacrilex, raw material used in gums, is taxed at 5%, gums at 10.2%

Drug makers want the government to lower the 18 per cent goods and service tax (GST) rate on nicotine gum as the current rate contradicts its health policy and makes de-addiction more expensive.

As per existing rates nicotine polacrilex (raw material used in gums) is taxed at 5 per cent while gums are taxed at 10.2 per cent. The GST rate on nicotine gums has been fixed at 18 per cent. The increase in rate has upset the industry that has petitioned the government to reconsider its move.

With tobacco taxation being at same level as the pre-GST structure, the cost of the gum will become dearer, thereby, having an adverse impact on adoption of nicotine replacement therapies and affecting quit rates, say drug makers.

De-addiction segment is valued at over Rs 100 crore annually, and nicotine polacrilex products constitute around 70 per cent of the segment. Cipla, Rusan Pharma and ITC aremamong the major manufacturers of nicotine gums in India.

"Due to an increase in the GST rate on products related to nicotine replacement therapy from 10 per cent to 18 per cent, there will be a negative impact on accessibility and availability of this therapy to consumers making it contrary to government's larger objective of tobacco de-addiction," said a Cipla spokesperson.

Rusan Pharma and ITC refused to comment on the matter.

At present, India is estimated have over 100 million smokers and is said to account for a fifth of all tobacco-related deaths worldwide. The central government included tobacco de-addiction as one of its seven priority areas in its new health policy. As a part of the policy, the government aspires to reduce tobacco use by 15 per cent by 2020 and 30 per cent by 2030.

However, some activists believe that while the increase in tax rate will make nicotine replacement therapies expensive, their impact on tobacco cessation programmes may not be significant. This is because 25.9 per cent of adults consume tobacco without smoking in comparison to 14 per cent of those who smoke.

"Tobacco cessation program of the country is, therefore, more targeted towards high-risk and vulnerable groups such as youth, women, rural populations, and the economically underprivileged. This group of audience won't opt for nicotine replacement therapies and hence, I don't think that the initiative taken by the government contradicts its policy of tobacco cessation. However, 18 per cent tax on nicotine gum will definitely make nicotine replacement therapies expensive but the impact on cessation program is almost diminutive," said Tshering Bhutia- an anti-tobacco campaigner.