This story is from December 17, 2017

HC ruling on cigarette warnings may help dometic tobacco industry: Experts

HC ruling on cigarette warnings may help dometic tobacco industry: Experts
Kolkata: The Karnataka high court ruling to restore the 40% graphic health warning (GHW) on cigarette packets from the current 85% could help curb smuggling of illegal cigarettes from non-restricted markets, feel tobacco industry experts.
Though tobacco companies have not reacted officially to the verdict, industry insiders say the 85% GHW had a negative impact on the domestic cigarette industry.
Tobacco Institute of India (TII), the representative body of the industry — that includes ITC and Godfrey Philips — too was not willing to comment, stating it was awaiting a written order.
However, industry insiders said the 85% GHW on legal cigarette packets led to a revenue loss of over Rs 7,000 crore for the Centre and states this fiscal itself. The main reason they cited was the proliferation of illegal smuggled cigarettes without GHW.
TII and cigarette makers had earlier said illegal tobacco trade was on the rise since the 85% rule was implemented in the second week of May 2016. According to industry estimates, the exchequer loses Rs 2,300 crore in revenue for every 1% shift in consumption from legal cigarettes to illegal and smuggled ones. So, if the industry estimates an up to 3% shift to illegal cigarettes, the loss will be Rs 6,900 crore.
According to a Ficci study, the Centre and states lose Rs 9,000 crore per year owing to the illegal tobacco trade — a growth of nearly 50% over a two-year period. So, the gross revenue leakage has gone up to Rs 16,000 crore after the enlarged GHW.
According to an independent study by global research organisation Euromonitor International, India is now the world’s fourth largest market for illegal cigarettes. The report estimates the illegal trade — comprising smuggled foreign and domestically manufactured tax-evaded cigarettes — constitutes a fifth of the cigarette industry in India.
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