The 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 the proposed graphic health warnings on tobacco items. This had opened the floodgates to illegal imports to the extent of 90 per cent, apex industry body Assocham said on Tuesday.
Acute financial distress being faced by farmers engaged in tobacco farming had led to a spurt in farmers’ suicides in the major tobacco growing states of Andhra Pradesh, Karnataka and Telangana. Already over 10 states are facing acute drought conditions and the current imbroglio will only serve to impose huge financial strain on many more farmers.
“The livelihood of more than 45 million people engaged in the tobacco industry across India is being threatened due to the ambiguity on the policy related to graphic health warnings on tobacco products,” the Associated Chambers of Commerce and Industry of India (Assocham) said in a communication addressed to the Centre.
“Today, the legal cigarette industry accounts for just 11 per cent of total tobacco consumption across India due to high taxation, thereby, leading to the exponential growth in sales of duty-evaded illegal cigarettes without pictorial health warnings,” it said.
The government exchequer was being denied one-fifth of the total tobacco industry revenue (over Rs 9,000 crore), which has led to a sharp rise in seizure of contraband cigarettes thereby making India a global hub for smuggled cigarettes. Even retailers are forced to sell illicit, contraband and illegal, local and international brands to protect their livelihoods.
The Parliamentary Committee on Subordinate Legislation had also recommended that new health warnings be modified to occupy 50 per cent of the front and back panes of cigarette packs, while the global average size of pictorial warnings on tobacco products is about 31 per cent. According to the Health Ministry notification, however, tobacco products are required to have pictorial warning on 85 per cent of the packaging space.
“With such excessive warnings, cigarette packets will virtually become unbranded thereby giving a fillip to illegal and smuggled products,” it said.
The size of pictorial warnings in India is much larger than the average of 20 per cent prevalent among top five tobacco producing countries — Brazil, China, Malawi, the US and Zimbabwe, comprising around 90 per cent of global tobacco production.
Moreover, the top three cigarette consuming countries — China, Japan and the US — that together account for 51 per cent share in global cigarette consumption, have only text-based warnings (about 30 per cent 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 urged the government to take a balanced view on the issue of graphic health warnings and ensure policies did not fall prey to a “misinformation” campaign led by people with vested interests that was only promoting illegal trade.