The Confederation of Indian Industry (CII) has urged the government to take into account certain provisions in the Cigarettes and Other Tobacco Products Bill in order to prevent it from having an adverse impact on the economy.
According to CII, the Bill in its existing form, applies only to cigarettes, which account for only 16 per cent of tobacco consumption in the country.
Other tobacco products such as bidis, chewing tobacco, gutkha, etc, are responsible for 84 per cent of the consumption of tobacco.
In fact, India has one of the lower per capita consumption of cigarettes in the world, but conversely has the highest per capita consumption of chewing tobacco.
CII, therefore, has recommended that the Bill should be enacted after extending its full scope to all tobacco products and after obtaining the endorsement of the states also.
Further, bidis and chewing tobacco are consumed by the economically weaker sections of society, as opposed to cigarettes which are consumed by the relatively well-off.
Therefore, says CII, if public health is one of the objectives of the Bill, then it is all the more necessary that its provisions should apply uniformly and with equal stringency to bidis, gutkha, etc.
Meanwhile, the already high rates of taxation on cigarettes have resulted in consumers shifting from cigarettes to other tobacco products.
While this has not affected overall tobacco consumption, it has had an impact on government revenues as consumers have shifted from highly taxed to tax inefficient tobacco products.
The restrictions and regulations on the domestic cigarette industry has also led to a spurt in contraband sales. Not only has this resulted in foreign companies attempting to create awareness for their brands, but has also led to an influx of low priced brands.
In addition, with the lifting of quantitative restrictions, the Indian cigarette industry needs to introduce new products, such as low nicotine and tar cigarettes to keep abreast of international trends and combat foreign competition.
As a result, the industry needs to inform consumers of such innovations and differentiation inorder to compete effectively.
However, this will not be possible if the ban on tobacco advertising is imposed, and thus lead to immense losses for the domestic cigarette industry.
Therefore, CII has suggested that press advertising be allowed, which will be product and information-oriented only and a committee (comprising of Asci, CII and other bodies) be set up to monitor this.
CII further suggests that cigarette manufacturers should be allowed to spend roughly 0.6 per cent of their sales turnover on press advertising and appropriate measures should be taken to prevent tobacco advertising by foreign manufacturers on satellite TV channels.
In addition, India being the third largest grower of tobacco, employs close to 35 million people and contributes approximately Rs 9000 crore as indirect taxes to the exchequer.
In addition, the exports of this sector are close to 150 million kg, resulting in foreign exchange earnings for the country in excess of Rs 850 crore.
Therefore, the government should ensure that the enactment of the Bill does not jeopardise the industry's employment potential, revenue generation, and forex earnings.
