In the last three decades, the legal cigarettes' share amongst total tobacco consumption in India has declined from 21% in FY82 to 10% in FY17.
Ever wondered why sometimes your cigarette tastes different or gets available at comparatively cheaper prices? It may be fake. One out of every three cigarettes available in the market is illegal, making it vulnerable to health hazards. One of the few ways by which illegal products are pushed into the market is by overproduction by tobacco companies, saving tax on the surplus. Since the surplus quantity is not monitored, its composition also goes unchecked. Illicit tobacco harms individual and population health in additional ways. It has been estimated that the illegal cigarette market reduces average cigarette prices by about 4% and is accountable for about 2% higher cigarette consumption.
In the last three decades, the legal cigarettes’ share amongst total tobacco consumption in India has declined from 21% in FY82 to 10% in FY17. On the other hand, during the exact period, the overall tobacco consumption within the country has increased by 33%. “This drop-in legal cigarette revealed in the shift to the illegal cigarette and the 3 unorganized sectors of the Industry,” revealed the Authentication Solutions Providers’ Association’ (ASPA) advisory report urging the government to eliminate illicit tobacco trade in India according to WHO FCTC requirements.
Prime Minister Narendra Modi last year ratified the FCTC protocol towards India’s commitment towards fighting illegal tobacco trade. “The idea is whatever is sold, should be sold through proper channels, Nakul Pasricha, President, ASPA, told Financial Express Online. Implementation of tax stamps has been one of the most effective measures and the experiences in many countries demonstrate that a comprehensive approach to address illicit tobacco markets is most effective, he added. In Bangladesh, the illicit trade in cigarettes was reduced from 20% in 2000 to 1.2% in 2009 and in Turkey, tobacco tax revenues rose by 31.5% within the first year of implementing the system, he further added.
Illicit trade makes tobacco products more affordable and accessible to individuals from low-income groups, as well as children increasing consumption. The average street price of cigarettes remains 50 to 60% lower in comparison to taxation paid cigarettes. “Eliminating or reducing the illicit tobacco trade in India will reduce consumption (by increasing price), save lives, and increase tax revenue to governments. The government of India is currently losing approximately Rs 13,000crore annually,” it added.