Tobacco Production

India is the world’s 2nd largest producer of tobacco with an estimated annual production of 800 million kgs. Tobacco occupies a meagre 0.24% of the country’s total arable land area. It is grown largely in semi-arid and rain-fed areas where the cultivation of alternative crops is economically unviable.

Tobacco Production India; Tobacco Production by countries; Top Tobacco producing countries

Source: Universal Leaf Tobacco*; UN Trade database (2013e)

* Universal Corporation, headquartered in Richmond, Virginia is the world’s leading leaf tobacco merchant and processor, based on volumes handled by its subsidiaries and affiliates, and has operations in agri-products. Universal releases its estimates for Leaf Production from time to time. These estimates are primarily based on market assessments by the worldwide Universal Group.

Tobacco is grown in the following 13 States in India:

  • Andhra Pradesh
  • Assam
  • Bihar
  • Chhattisgarh
  • Gujarat
  • Karnataka
  • Madhya Pradesh
  • Maharashtra
  • Odisha
  • Tamil Nadu
  • Telangana
  • Uttar Pradesh
  • West Bengal

Different varieties of cigarette & non-cigarette tobaccos are grown in India, these are as follows:

Cigarette Tobacco production
A. FCV Tobacco
B. Non-FCV Tobacco

  • LS Burley Tobaccos
  • HDBRG Tobaccos
  • Air/Sun cured Tobaccos
  • Oriental Tabaccos
Non-Cigarette Tobacco production
Bidi Tobacco
Hookah Tobacco
Chewing Tobaccos

India’s tobacco production pattern is, however, not aligned to world tobacco production:

% of Tobacco Production by Type – 2012

% (percentage) of Tobacco Production; World Tobacco Production; Various Types of Tobacco Production; Burley tobacco production; FCV Tobacco Production; Oriental Tobacco Production

Source: Universal Leaf/Tobacco Board etc.

The disparity in tobacco production pattern in India vis-à-vis world is due to a unique pattern of tobacco consumption in India dominated by non-Cigarette products.

India is the 3rd Largest Producer of FCV tobacco in the world

In India, production of Flue-Cured Virginia (FCV) tobacco – a variety used in Cigarettes, accounts for around 40% of total tobacco produced in India. India is the 3rd largest producer of FCV tobacco in the world with an annual production of around 300 million kgs.

FCV Production in India, FCV production by countries; TOP FCV producing countries; World FCV Production

Universal Leaf Tobacco Co. Inc.-2014

This variety of tobacco is grown in only three States in India viz. Andhra Pradesh, Karnataka and Telangana. Studies conducted by the Central Tobacco Research Institute (CTRI), Rajahmundry, have shown that FCV tobacco is more remunerative than other crops grown in the region, and is difficult to substitute.

Between the period 2007-08 to 2013-14, gross farmer earnings have almost doubled.

FCV Tobacco main exportable variety

FCV is the main exportable tobacco produced in India and more than half (60%) is exported with the rest used in domestic cigarette manufacture. Due to the small & shrinking share of tobacco consumption in the form of legal cigarettes (11%), non-cigarette tobacco varieties dominate in India.

The performance of FCV tobacco has been impressive, particularly in terms of export and farmer earnings:

FCV Tobacco 2001-02 2013-14 Change
Production (Mln. Kg) 167.97 315.92 88%
Average Price (Rs/Kg) 34.80 122.60 252%
Gross Returns (Rs Cr)* 584.55 3873.19 563%
Exports (Rs Cr) 483 4086 746%

Source: Tobacco Board (*Derived)

Over the years, FCV Tobacco crop has well established as a commercial crop providing consistently good returns to the farmers and the crop size has increased incrementally to match the global demand.

No sustainable alternative to FCV (Cigarette) tobacco

Tobacco grows in poor, marginal soils that are largely unsuitable for cultivation of other crops. It is a highly labour intensive and remunerative crop providing much higher returns than other crops grown in the region. Studies conducted by the Central Tobacco Research Institute (CTRI) have also outlined that no single crop is more remunerative than FCV tobacco. It has also been proven that tobacco-based cropping systems are more remunerative than non-tobacco cropping systems.

Crop Andhra Pradesh 1 Karnataka 2
FCV – Light Soils 33061 31226
FCV – Black Soils 19539
Cotton 2906 22380
Maize 4576 15394
Bengal Gram 9325

Source: Tobacco Board, Ministry of Commerce, Govt. of India

1. Returns from FCV tobacco vis-à-vis other Alternative Crops in Andhra Pradesh during 2007-08 to 2011-12

2. Returns from FCV tobacco vis-à-vis other Alternative Crops in Karnataka during 2004-05 to 2009-10

During the crop holiday of 2000-01 in undivided Andhra Pradesh, farmers grew alternative crops such as red gram, bengal gram, black gram, green gram and in very limited areas with water resources, they grew paddy and sugarcane. The 2004 CTRI study on the impact of the crop holiday showed that due to this substitution of tobacco by other crops, farmers suffered a total loss of Rs.225 crores as compared to the value realization in the previous year. The remunerative nature of FCV tobacco can be gauged from the fact that in the succeeding year itself farmers reverted to the crop in four-fifths of the area. In fact, in the subsequent years following the crop holiday, the farmers even went beyond the pre-crop holiday levels of crop production.