Legal cigarettes account for just 9% of overall tobacco consumed in India. The balance 91% of consumption is represented by traditional products like chewing tobacco, bidis, khaini etc. and illegal cigarettes.

This is unlike the rest of the world where tobacco is synonymous with cigarettes, representing 90% of tobacco consumption.

Tobacco & Tobacco Products contribute Rs.43,000 crores worth of Tax Revenue to the Government annually. Legal cigarettes contribute 80% of the total tobacco tax revenue despite accounting for just 9% share of tobacco consumption. Revenue realisation by the Government on a per kg basis of Tobacco used in various product forms is 41 times higher on cigarettes than other tobacco products.

India is the world’s 2^nd largest producer and a major exporter of tobacco. With an estimated annual production of 800 million kgs., tobacco is an extremely important commercial crop in the country, providing livelihood to 45.7 million people.

Tobacco products generate significant tax revenues amounting to more than Rs.43,000 crores annually.

Illegal Cigarette trade accounts for as much as 1/4^th of the Cigarette Industry in India, causing an annual revenue loss of more than Rs. 15,000 crores per annum.

Extremely high and constantly increasing tax rates on Cigarettes provide a profitable opportunity for tax evasion thereby encouraging growth in illegal trade.