- 10 Tobacco Farmers from Andhra Pradesh & Telangana awarded for sustainable & progressive farming
- 3 Scientists honoured for their contribution towards Tobacco crop research and development
- Political leaders, Tobacco Board & CTRI officials and farmers in large numbers attended the Awards ceremony
- The Tobacco Institute of India (TII) highlighted the growing menace of illicit/smuggled cigarettes resulting from excessive taxation and extreme regulations
- TII underscored the need for policy measures to curb the illicit cigarette trade which is affecting livelihood & earnings of FCV tobacco farmers & causing huge revenue loss to Government
- Balanced tobacco policies, reduced cigarette taxation and sustained enforcement action against smuggled cigarettes are need of the hour
Devarapalli, 10th July 2024: The Tobacco Institute of India (TII) today organized the 24th edition of the TII Tobacco Farmers’ Awards to honour progressive farmers from Andhra Pradesh and Telangana who have demonstrated the benefits of contemporary farming practices, leading to enhanced productivity levels.
Alongside, the Institute held the inaugural edition of TII Tobacco Scientist Awards to recognize the research and commitment of agricultural scientists working in the field of tobacco farming. This award would be presented annually to scientists who have made significant contribution towards Tobacco crop research and crop development.
The awards ceremony was attended by the Hon’ble Members of Parliament, Smt. D. Purandeswari and Shri Putta Mahesh Kumar; Hon’ble Member of Legislative Assembly, Shri Maddipati Venkata Raju; Chairman, Tobacco Board, Shri Yashwanth Kumar; Vice Chairman, Tobacco Board, Shri G. Vasu Babu; Director CTRI, Dr. M. Sheshu Madhav; Secretary, Tobacco Board, Shri D. Venugopal and District President, BJP, Shri Bommula Dattu.
The ceremony witnessed the felicitation of 13 tobacco farmers in four separate categories — Lifetime Achievement Awards (2), Best Farmer Awards (5) Sustainability Awards (2) and Recognition Awards (4). TII introduced Sustainability Awards in Karnataka edition of the Awards in 2023 to showcase the benefits of sustainable farming practices and protection of the environment.
Further, 3 agricultural scientists were honoured with the 1st TII Tobacco Scientist Awards.
Speaking at the awards ceremony, Mr. Sharad Tandan, Director, TII, said, “The Tobacco Institute of India instituted these awards in 1999 with a view to honour and encourage the cigarette leaf tobacco farming community for its effort in adopting modern and progressive farming practices, which would help improve yields, produce improved varieties, and make Indian tobaccos competitive in the global market. These awards endorse TII’s firm support to tobacco farmers and acknowledge their important socio-economic contribution to the country.”
He added that being world’s 2nd largest tobacco producer and a leading exporter, tobacco is an important commercial crop in India. The cash crop generates significant socio-economic benefits with respect to livelihood generation, Government revenue collection and foreign currency earnings through exports. Amongst the different varieties of tobacco grown in India, Cigarette type tobaccos namely Flue Cured Virginia (FCV) and Burley are the most remunerative varieties with huge export demand. With FCV and burley being the major contributors, India’s tobacco exports reached a record high of more Rs. 12,000 crores during the last financial year.
“In 2022-23, FCV Tobacco exports increased by 29% to 135 million kgs and a further 6% in 2023-24, aided by sourcing by tobacco majors due to global supply chain shortages. However, the exported quantity is far below the 180 million kgs exported a decade back in 2013-14,” Mr Tandan added.
“We can attain newer heights in tobacco exports if we harness the tremendous export potential of tobacco by aligning our tobacco production with the global demand. India has a huge potential to increase its share of the global tobacco trade and to fetch the country precious foreign exchange earnings,’ he emphasized.
“In order to increase India’s share of the global tobacco trade, our government should provide export incentives similar to what other large tobacco-producing/exporting countries like Zimbabwe, Malawi etc. offer to the tobacco sector. This would improve price competitiveness of Indian tobaccos in the world market, help tap the export potential of the tobacco sector, benefitting the domestic tobacco farmers in the country,” Mr Tandan said.
Stating that besides exports, a stable domestic market is necessary to ensure higher earnings for farmers, TII Director said that the FCV tobacco crop in India is impacted by large illegal cigarette trade, which has grown over the years due to extremely high cigarette taxation, resulting in tax arbitrage for illicit operators.
“As a percentage of per capita GDP, Cigarette taxes in India, are amongst the highest in the world as per data released by the WHO recently. With such high levels of taxation, the affordability of legal cigarettes in India is significantly lower than in most emerging economies like Pakistan and Malaysia as well as developed countries such as Japan, USA, Germany, China, and UK. The unaffordability of legal cigarettes has led to a shift in consumption from legal tax-paid cigarettes to cheaper non-cigarette forms of tobacco consumption and tax-evaded illicit cigarettes.,” TII Director said.
The share of duty-paid legal cigarettes in total tobacco consumption in India has declined from 21% in 1981-82 to 9% in 2021-22. However, overall tobacco consumption in the country has increased by a massive 49% during this period.
Mr. Tandan expressed concern that high arbitrage, resulting from excessive taxation on Cigarettes and the extremely large 85% pictorial warnings, has provided a huge boost to smuggled cigarettes. Illicit operators are bringing in substantial stocks of smuggled cigarettes into the country, which are priced much lower due to evasion of taxes.
According to Euromonitor International, India is currently the fourth largest illicit cigarette market in the world. Illicit cigarettes amount to more than one-third of the legal cigarette volumes, causing an annual revenue loss of Rs.21,000 crores to the Government.
The huge profits available due to the high tax arbitrage encourage illegal operators towards the growing illicit cigarette trade. The involvement of criminal gangs and terror networks in illegal cigarette trade has been acknowledged by WHO and other international organizations.
There are media reports of seizures of smuggled cigarettes almost every day. However, the reported seizures are only the tip of a much larger operation. In fact, for every such seizure, multiple consignments escape the surveillance net, due to the overwhelming volumes involved, despite the commendable efforts of the enforcement authorities to contain the problem. The widespread availability and presence of smuggled cigarettes across markets are a proof of this.
Illicit cigarette trade not only leads to the loss of revenue to the government but also poses challenges to the enforcement agencies, enhancing risks of terror funding and costs for the maintenance of law and order.
Since smuggled cigarettes do not use domestically produced tobaccos, their presence over the years has caused drop in demand for tobaccos grown locally, affecting FCV production and earnings of farmers. Overall, FCV tobacco production in India dropped from 316 million kgs in 2013-14 to 189 million kgs in 2021-22, causing loss of an estimated 35 million man-days of employment in the tobacco growing areas in the country.
According to TII, the tax stability provided by the Government in 2021 & 2022 resulted in legal cigarettes recouping some volumes from illicit with higher demand for domestic FCV tobaccos. Consequently, FCV crop production during 2022-23 was higher at 241 million kgs, however, it still remains well below the levels attained in 2013-14.
“While FCV tobacco production in India has reduced over the past 10 years, other tobacco-producing nations have increased their production to meet the global demand. Thus, the drop in domestic tobacco production has only resulted in the export of jobs from India to other leaf tobacco-growing countries like Brazil, Zimbabwe, Vietnam, etc.,” Mr Tandan said.
Extreme regulations and high taxation on cigarettes have hurt stakeholders of tobacco sector, particularly farmers while smugglers and anti-social/criminals have benefited over the years. An increase in taxes on cigarettes, encourages illicit operators as it increases the profit for illicit trade and reduces legal volumes resulting in a loss in Government Revenue and Farmer Income.
The prosperity of our FCV tobacco farmers is dependent on the domestic legal cigarette industry. A stable domestic legal cigarette market achieved through balanced regulations, stability and equity in tobacco taxes will benefit our FCV tobacco farmers by increasing the sale of locally grown tobaccos. Assured domestic demand will also encourage our farmers to grow superior quality tobaccos and will protect them against fluctuations in the international market.
The high and unbalanced taxation policy over the years led to sub-optimal Government revenues, increased illicit trade, caused a shift in tobacco consumption from tax-efficient Cigarettes to illicit tobacco products in the country, and hurt the livelihood and earnings of Indian tobacco farmers. This policy has neither met the social objective of tobacco control nor the revenue objectives of optimizing tax collections.
According to TII, a reduction in taxation is necessary as this would provide an opportunity for the legal cigarette industry to recoup volumes from illicit trade and improve the Government’s revenue collections. At the same time, such a policy would also help protect the livelihood of domestic tobacco farmers by ensuring higher offtake of tobacco produced by them.
About TII Awards:
The Tobacco Institute of India (TII) instituted the TII Tobacco Farmers’ Awards in the year 1999 to recognize and encourage the Flue Cured Virginia (FCV) tobacco farming community into adopting modern and scientific farming practices. These awards seek to facilitate improvement in yields, productivity, quality and global competitiveness of the domestic cigarette tobaccos through adoption of contemporary farming practices.
The response and success of these awards over the years encouraged TII to subsequently extend them, in 2009, to include the air-cured varieties of tobacco also.
The annual awards ceremony also provides a platform for all stakeholders in tobacco sector to meet and interact on issues of common interest, particularly regarding farming practices and policy formation.
This year, the Institute established the annual TII Tobacco Scientist Awards to recognize the innovative research and commitment of agricultural scientists working in the field of tobacco farming.