01Tobacco consumption pattern in India is unique
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.
02Legal Cigarette Industry is the primary Tobacco revenue contributor to the Govt.
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.
03Tobacco is a very important commercial crop in India
India is the world’s 2nd 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.
04The Growth of illegal Cigarette trade poses serious threat in India
Illegal Cigarette trade accounts for as much as 1/4th 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.
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