Illicit tobacco selling has a very minimal market share in India, says study

A recent study claims that illicit cigarette trading is not a big issue and its market share is minimal. That means illicit tobacco selling does not pose a huge threat to the sales of the big tobacco companies that follow the policies and restrictions. According to The Tobacco Institute of India, illegal cigarette trade involves smuggling of international brands and cigarette selling by locally manufactured shops which evade taxes of almost one-fourth of the cigarette industry in India.

The institute says that the revenue losses caused due to illicit cigarettes stand at Rs 13,000 per annum. But the recent study carried out by the researchers Rijo M John of the Centre for Public Policy Research in Kochi, Kerala, and Hana Ross of the University of Cape Town, Cape Town, South Africa, gives a different statistics. The study found out that the market share of illicit cigarettes might be as low as 2.73 percent, thus contracting the industry claims of almost 20-22 percent market share of illicit cigarettes. For the study, the researchers took into account empty packs of single cigarettes from one day sell. The three classes of vendors that it selected include tea shops, brick-and-mortar shops, and pan shops. The study considered the empty packets as illicit if they have a duty free sign, no pictorial or textual health warnings, no mention of ‘price inclusive of all taxes’, etc.

After analyzing 11,063 empty packets collected from 1,727 retailers, the researchers found out that only 2.73 percent of the packets could be classified as illicit or illegal. Aizwal was the city having the highest share of illicit cigarettes, and it was followed by Kolkata. Among the cigarette packets, 97.3% had ‘Made in India’ Sign, 1.94% bore Made in Myanmar, and 0.61% displayed made in Indonesia. The rest were Nepalese, English, French and swish made. Nearly 2.7 percent packets had no MRP mentioned on them.

In recent years, more restrictions have been put on selling tobaccos in India. From increasing the percentage of pictorial and text representations of health warning labels to higher taxation, cigarette and tobacco selling have faced a lot of stringent policies. Big Tobacco, a conglomerate of top five largest tobacco industry companies, has repeatedly been complaining about illicit and unlawful tobacco sales and higher taxation of cigarettes. When government recently increased the health warning size from 40 percent on one side to 85 percent for both the sides, the Big Tobacco got worried. It cited massive losses of tobacco revenue due to all these restrictions and prohibitions. But the latest study completely debunks these claims, and it seems that the restriction policies and high taxes made by the government on tobacco sells is almost justified.

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