Legal cigarettes account for just 10% of overall tobacco consumed in India. The remaining 90% of consumption is in the form of illegal cigarettes and 29 tax -inefficient tobacco products such as bidis, chewing tobacco, khaini etc.

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

Tobacco & Tobacco Products are a large contributor to the Government's Tax Revenue. Tobacco products generate Tax revenues amounting to more than Rs.76,000 crores annually. Legal cigarettes contribute a very high proportion of the total tobacco tax revenue despite accounting for just 10% share of tobacco consumption.

India is the world’s 2^nd largest producer and a major exporter of tobacco. With an  annual production of  around 1037 million kgs, tobacco is an extremely important commercial crop in the country, providing livelihood to 45.7 million people.

Tobacco products generate Tax revenues amounting to more than Rs.76,000 crores annually.

Illegal Cigarette trade results in an estimated annual revenue loss of around Rs. 40,000 crores (Based on Current tax rates) to the government. 

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