Illegal trade up 90 percent

The consumption of illicit cigarettes in India increased by 90 percent last year, according to a story by Siddharth Tiwari for the Sunday Guardian, citing ‘industry’ figures.

Industry studies backed by seizure figures are said to have revealed that 17 billion cigarettes are smuggled into India each year.

But, presumably because of locally-produced cigarettes on which tax is not paid, the total number of illicit cigarettes on the market is much higher. According to Euromonitor International, the number of illicit cigarettes consumed in India has increased from 11.1 billion in 2004 to 23.9 billion in 2015.

This was said to make India the fourth largest illicit-cigarette market.

Meanwhile, a study by the Federation of Indian Chambers of Commerce and Industry indicated that the number of illicit cigarettes in India had double during the past decade, causing an annual revenue loss to the national exchequer of more than Rs90 billion.

The illegal trade was said also to be undermining the government’s efforts to reduce smoking by making cigarettes increasingly expensive.

But some see the high-tax strategy used by the government as being at least part of the problem.

Tobacco-industry experts were said to have told the Sunday Guardian that high and discriminatory taxes, coupled with extreme regulations such as pictorial warnings, were providing a boost to the illegal cigarette trade in India.

“The illegal cigarette trade is on a growth trajectory due to the high tax arbitrage,” said Syed Mahmood Ahmad, director of the Tobacco Institute of India.

“In addition to this, non-adherence of illegal cigarettes with regulations like pictorial warnings lends an impression that they are safer alternatives to their legal counterpart.”