It has called for the restoration of single point taxation and has sought the rationalisation of excise slabs for cigarettes, so that the impact of specific duty can be brought down by 15 per cent from the present 55 per cent of retail price.

The revival of the industry could receive a setback on account of the unexpected 10 per cent increase in excise for the lowest cigarette length slab. The Tobacco Institute has said the rate on mini-cigarettes (59mm) be restored to Rs 100 per thousandsticks.At the same time, an increasing number of states has been imposing local levies in the form of luxury and entry taxes ranging from 3 to 10 per cent.

The Tobacco Institute estimates the total collections from taxes at equivalent to 7 per cent of the central excise duty collections from cigarettes. The Indian cigarette companies appear unanimous against the entry of multinationals. The primary reason for this, as put forth by them, is that nearly 50 per cent of the total installed capacity is under-utilised.

At the same time, several international brands are available in India under licensee agreement with local companies. Indian companies have also given full co-operation to tobacco farmers for crop development, and hence the association feels that there is no need for allowing foreign direct investment. The institute has also said that the ban on cigarette and bidi sales in railway station,, as announced in the last Railway Budget, is unlikely to serve its desired purpose and will only promoteillicit trade. In the last Union budget, the finance ministry had heeded to representations from the industry on the excise duty structure and did not propose any overall increase in duties except for the smallest length cigarettes.

The industry had said that higher excise in the previous two budgets has had a negative effect on local companies resulting in a situation of diminishing returns, resulting in lower volume sales and consequently lower excise collections for the Centre. Cigarettes with a low 19 per cent share of tobacco consumption are the only revenue-efficient tobacco product contributing 87 per cent of collections from tobacco.