Tobacco Industry Country Profile – India

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India

Image 1 : India[1]

Republic of India is the largest country by area and population in South Asia. It has 29 states and seven Union territories. India is surrounded by the Indian Ocean on the south, the Arabian Sea on the southwest, and the Bay of Bengal on the southeast. To the west of India is Pakistan; to its north are China, Nepal, and Bhutan while Bangladesh and Myanmar are to its east. According to World Population Review in terms of area India is the seventh largest country and by population it is the second largest populated country in the world.[2]. As per the World Atlas the modern Indians, who arrived in India were hunters and were dependent on animals as their food.[3] Later the settled life began in India, with people depending on agriculture as their source of food and later income. At present India is predominantly an agricultural country with wheat, rice and tobacco being its main cash crops.[4]

With the advent of Indus Valley Civilisation, India began to develop as a nation, followed by rules of Kingship and Dynasties. The seventeenth century marked the beginning of rule of the British East India Company which was succeeded by rule of British crown. India ushered into a new era of independence and formed it first democratic Parliamentary government after it attained its independence from Britishers on 15th August, 1947. Today India is recognised as the world’s largest democracy. With its political, social and religious past, India today is a land of myriad languages, numerous cultures, countless customs; inhabited by people of various religions, beliefs and practices. India is one of the largest growing economies in the world. India recorded GDP growth rate of 6.8 in 2018.[5]

Healthcare sector is one of the most blooming sectors in India. By 2020, it is expected that Indian healthcare sector is expected to reach Rs 19,56,920 crore (US$ 280 billion).[6]

Tobacco Use in India

As of 2020, India is the second largest consumer of tobacco according to Global Adult Tobacco Survey (GATS)[7] GATS shows that 28.6% (266.8 million) of adults aged 15 and above in India currently use tobacco in some form. The prevalence of tobacco use among men is 42.4%, while among women it is 14.2%. Among the adults, 24.9% (232.4 million) are daily tobacco users and 3.7% (34.4 million) are occasional users.[7]

The most commonly used tobacco product in India is smokeless tobacco, which is used by 21.4% of adults Indians, followed by beedi that is smoked by 7.7% of adult Indians.[7]

Burden of Tobacco Use

As per the Tobacco Atlas, tobacco kills 13,452 men every week.[8] As per Government of India’s report on economic burden of tobacco related diseases, the total economic costs attributable to tobacco use from all diseases in India in the year 2011 for persons aged 35-69 amounted to Rs. 16,800 crore (US$ 3.6 billion), and associated indirect morbidity cost amounted to Rs. 14,700 crore (US$ 3.1 billion).[9]

Tobacco Industry in India

Tobacco Companies and Market Shares

India is the second largest producer and third largest exporter of tobacco in the world. The ITC limited currently has the highest market share (84.27%). Rest is distributed among companies such as Kothari Products Ltd., Godfrey Phillips India Ltd., VST (Vazir Sultan Tobacco Company) Industries Ltd., and other small scale cigarette manufacturers.[10]

Tobacco Cultivation & Manufacturing

Image 2: A woman working in a tobacco farm in Karnataka, India.[11]

According to a factsheet of The Tobacco Institute of India on tobacco production, 0.24% of India’s total arable land is used for tobacco cultivation. India grows 93 varieties of tobacco and annual estimated production is 800 million kilogrammes, making India the second largest producer of tobacco in the world.[12]

In 1976 under The Tobacco Board Act 1975, the Government of India established the Tobacco Board, under the Ministry of Commerce and Industry, Department of Commerce. According to its website, “"Tobacco Board is committed to accomplishing its role - the expressed will of parliament - for the smooth functioning of a vibrant farming system, fair and remunerative prices to tobacco growers and export promotion."[13]

Role in the Economy - Tax, Exports and Employment

Tax

In India two types of taxes are levied, direct and indirect. Direct tax is levied on the taxable income of individuals and corporates. The indirect taxes are levied on the services and the goods. The Centre and the State government levy indirect taxes. Taxes to be levied are announced by the government for each financial year. India’s excise revenue collected from tobacco products in 2014-15 was nearly USD 2.69 billion.[14]

Goods and Services Tax (GST) was implemented in the country with effect from 1st July, 2017 replacing all the other taxes like excise, service tax and state taxes. Under the new GST regime 28% GST is levied on cigarettes and smokeless tobacco. National Calamity Contingent Duty and compensation cess is also levied on specified tobacco products.[15]

The tax revenue from cigarettes across India in fiscal year 2019 was approximately 350 billion Indian Rupees, while the total revenue of India amounted to 23164 billion Indian Rupees.[16][17]

Export

The total exports value of tobacco products in 2014-15 is recorded to be USD 0.9 billion, out of which the major share is from unmanufactured tobacco export earnings.[14]

Employment

In India, both skilled and unskilled people are employed at various levels in the demand and supply chain of tobacco industry. The tobacco industry is highly unregularised. Even the ‘registered growers’ are only listed in certain States. As per International Labour Organisation’s Tobacco Sector Employment Statistical Update, India recorded a rise from 62,800 tobacco growers in 2001 to 89,300 in 2013.[18]. In India,1.7 million children are employed in beedi rolling industry, as per an investigative report published by BBC.[19] According to the same investigate report,::“Working between 10 and 14 hours a day, Aliya's mother and others must roll at least a 1,000 beedis each, to earn a paltry sum of less than $2 (£1.28) paid by the middleman. The beedi manufacturers, however, make billions of dollars”.[19]

Image 3 :Children rolling beedi in India[20]

Social Investments

Section 135 of Companies Act, of India, 2013 Corporate Social Responsibility makes it mandatory for all major corporate entities to spend at least two per cent of their profit on CSR (Corporate Social Responsibility) works.[21]. The Tobacco companies are involved in corporate social activities in a range of areas including education and health.[22]

TobaccoUnmaskedSouth.Asia Resources

Notes

  1. www.alkamilbooking.com. uploads, undated, accessed February 2020
  2. World Population Review. India Population, Undated, accessed February 2020
  3. World Atlas A Brief History Of Indian Civilization, undated, accessed February 2020
  4. D K Sinha. Distribution and Production of Crops in India, Undated, accessed February 2020
  5. The World Bank. GDP growth (annual %) - India,Undated, accessed February 2020
  6. India Brand Equity Foundation. Indian Healthcare Industry Analysis, August 2019, accessed February 2020
  7. 7.0 7.1 7.2 Global Tobacco Surveillance System. Global Adult Tobacco Survey Fact Sheet 2016-2017, Undated, accessed February 2020
  8. American Cancer Society Inc., Vital Strategies. India, Tobacco Atlas, 2020, accessed on February 2020
  9. Public Health Foundation of India, Ministry of Health and Family Welfare, WHO Country Office of India. Economic Burden of Tobacco Related Diseases in India, 2014, accessed on February 2020
  10. Business Wire. The Tobacco Market in India (2018-2023): Leading Players are ITC, Kothari Products, Godfrey Phillips India, VST Industries, Golden Tobacco Company, and NTC Industries, 20 March 2019, accessed February 2020
  11. The Hindu website. Big Tobacco Field, undated, accessed February 2020
  12. The Tobacco Institute of India. factsheet of The Tobacco Institute of India, Undated, accessed February 2020
  13. Tobacco Board. website, 08 February 2020, accessed February 2020
  14. 14.0 14.1 Revenue Earned On Tobacco Products, 2 December, 2015, accessed on February 2020
  15. Ministry of Finance. Tax Revenue 20-21, Undated, accessed February 2020
  16. Statista Research Department of tax revenue from cigarettes in India 2005-2019 7 February, 2020 accessed February 2020
  17. Ministry of Finance, Government of India. Abstract of Receipts, Union Budget, Undated, accessed February 2020
  18. International Labour Organisation. [1], 2014, accessed February 2020
  19. 19.0 19.1 BBC News India's tobacco girls, 12 June 2012, accessed February 2020
  20. Women News Network. [https://i0.wp.com/womennewsnetwork.net/wp-content/uploads/2012/06/030-india_bideeproductionfamilyimageplaninternational.jpg?zoom=2&resize=489%2C329&ssl=1 India bidi production family, 30 June 2012, accessed February 2020
  21. Ministry of Corporate Affairs [2] Undated, accessed on February 2020
  22. ITC Social Responsibility Policy Undated, accessed on February 2020