NEW DELHI: Tobacco industry is facing losses worth over Rs. 350 crore each day as cigarette makers have been forced to shut operations due to lack of clarity on proposed graphic health warnings on tobacco items and opened floodgates in terms of illegal imports to the extent of 90 percent, apex industry body ASSOCHAM said today.
“Livelihood of more than 45 million people engaged in tobacco industry across India are being threatened due to this ambiguity on policy related to graphic health warnings on tobacco products,” said ASSOCHAM in a communication addressed to the union government.
“Today, the legal cigarette industry accounts for just 11 per cent of total tobacco consumption across India due to high taxation thereby leading to exponential growth in sales of duty-evaded illegal cigarettes without pictorial health warnings,” it said.
In its letter, ASSOCHAM has also pointed out that acute financial distress being faced by farmers engaged in tobacco farming had led to spurt in farmer suicide in major tobacco growing states of Andhra Pradesh, Karnataka and Telangana.
“Already over 10 states in India are facing acute drought conditions and the present imbroglio will only serve to pull many more farmers in huge financial strain.”
ASSOCHAM also highlighted that government exchequer was being denied one-fifth of total tobacco industry revenue i.e. worth over Rs. 9,000 crore which has led to sharp rise in seizure of contraband cigarettes thereby converting India into a major global hub for smuggled cigarettes.
Even retailers are forced to sell illicit, contraband and illegal, local and international brands of cigarettes to safeguard their livelihood.
The Parliamentary Committee on Subordinate Legislation had also recommended that new health warnings be modified to occupy 50 percent of front and back panes of cigarette packs.
Highlighting the distinct deviation from global trends, ASSOCHAM letter noted that global average size of pictorial warnings on tobacco products is about 31 percent whereas as per the notification of union health ministry, tobacco products are required to have pictorial warning on 85 percent of packaging space.
“With such excessive warnings, cigarette packets will virtually become unbranded thereby giving a fillip to illegal and smuggled products,” it said.
It further noted that the size of pictorial warnings in India is much larger than the average of 20 percent that is prevalent among top five tobacco producing countries – Brazil, China, Malawi, USA and Zimbabwe, comprising around 90 percent of global tobacco production.
Moreover, the top three cigarette consuming countries – China, Japan and USA that together account for 51 percent share in global cigarette consumption have only text based warnings (about 30 percent in size) and have not adopted pictorial warnings.
In 2012, the US Court of Appeals for the District of Columbia Circuit struck down similar pictorial warnings as unconstitutional, as they were found to be factually inaccurate and misleading.
ASSOCHAM has thus urged the government to urgently look into the matter and take a balanced and moderate view on issue of graphic health warnings and policies do not fall prey to misinformation campaign led by people with vested interests that is only promoting illegal trade.
“Until the government has considered the Parliamentary Committee’s recommendations, it would be appropriate to retain current warnings so that the industry is able to resume operations and farmers do not lose their precious livelihood,” it further said.