Challenging the Cigarette and Other Tobacco Products Act (COTPA) 2003, which empowers the government to regulate tobacco use in India, may not be on the radar of the Indian cigarette industry now. But such an action cannot be ruled out completely if the government refuses to take back its new rule which mandates that the size of pictorial health warning be increased to 85% (up from the existing 40% on front of the pack) of the packaging space on both sides of the packet. The new rule, in effect from April 2016, has rattled the industry to the extent that they have halted cigarette production altogether, till they hear about a more acceptable norm from the government. The new 85% rule is “excessive and beyond the provisions of COTPA,” says the Tobacco Institute of India (TII), an umbrella body representing almost the entire (duty-paying) cigarette industry of India. Some pragmatism from the government is urgently awaited to address the concerns of an industry that pays about 30,000 crore of excise every year besides earning Rs 6,000 crore of export earnings, say members of the tobacco industry.
In the meantime, such a halt in cigarette production has triggered black-marketing of the same.
“The government is looking at the issue only from the health point of view. This is not bad but it is also a livelihood issue of about 45 million people (including farmers, labourers, traders and suchlike) dependent on tobacco trade,” says Chengal Reddy, chief advisor to Consortium of Indian Farmers Associations. Many feel that till an alternative employment is made available to such people, such harsh regulations should be kept in abeyance. The TII says that the new norm has been foisted upon them “to please the anti-tobacco activists, many of whom are espousing the cause due to vested interests.” It feels that the “85% warnings” rule will promote illegal cigarette trade, a phenomenon already on the rise. Many feel that the cigarette industry may settle for 50% pictorial warning space as recommended by the Parliamentary Committee on Subordinate Legislation. The general rule elsewhere in the globe is a mere 20%. The industry feels that the existing norm of having the pictorial warning at 40% space on the front of the pack is sufficient to create awareness among smokers about the harmful impact of smoking tobacco. What has also irked the industry is the heavy taxation that every successive budget imposes on them, a reason why people switch to lower priced brands or shift their loyalties towards illegal cigarettes with suspicious quality. More than 70% of the price of cigarettes is made up of the tax component. Heavy taxation has promoted trade in illegal cigarettes (comprising both smuggled in and domestically manufactured cigarettes that have evaded taxes) that now accounts for over 20% of India’s cigarette industry thus making India the “4th largest illegal cigarette market in the world,” says Euromonitor International.