Cigarette smuggling: India

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This is a collection of articles archived for the excellence of their content.

On a rise: 2012-15

The Times of India, May 30 2015

Sushmi Dey

Four-fold rise in cigarette smuggling into India: WHO

Cigarette smuggling into the country increased four-fold (by value) between 2012 and 2014, seizure data from the Directorate of Revenue Intelligence (DRI) shows. The data has been cited in a latest draft working paper prepared by the World Health Organization (WHO) to contend that illicit trade in tobacco products undermines tobacco control policies and leads to significant revenue loss. WHO has pegged the import duty evasion from smuggling cigarettes into the country at Rs 2,363 crore for 2014-15.

According to the paper, titled `Illicit Tobacco Trade In India: Forms, Trends and Potential Actions', the smuggled cigarettes are suspected to be from Korea, Indonesia, Malaysia, Singapore, China and the United Arab Emirates and common transit points are Delhi, Singapore and Dubai.

“In the south-east Asia region, many countries have porous borders that provide easy opportunity for the smuggling of tobacco products. All south-east Asian countries have enacted stringent laws to control tobacco consumption ­ both on pricing and sale of tobacco products in-country as well as against import of foreign brands ­ and despite these efforts, there is still a thriving trade in smuggled tobacco products,“ Poonam Khetrapal Singh, regional director of WHO in south-east Asia region, said.

Singh said illegal trade of tobacco products facilitated increased use of tobacco by youth and adults from low-income groups by bringing down the cost and making them more accessible. Moreover, health regulations such as pictorial warnings or increased taxes are also not applied on illegal products.

2015-18

John Sarkar, Dec 17, 2019: The Times of India

NEW DELHI: India has become the fourth largest and the fastest-growing illegal cigarette market in the world with smuggled ones accounting for a quarter of the domestic cigarette industry.

The illegal cigarette trade has more than doubled from 12.5 billion sticks in 2005 to 26.5 billion sticks in 2018, revealed data from market reasearch company, Euromonitor and the Tobacco Institute of India (TII). Popular domestic cigarette brands, for instance, are nearly non-existent in the mountainous belt between Munsiyari and Almora in Uttarakhand. Instead, shopkeepers push brands finding their way in from Nepal that cost Rs 80 for a pack of 20 king-size sticks, compared with Rs 100 for 10 short sticks from an Indian brand.

Indian tobacco bodies attributed the increase in contraband cigarettes to the high taxes levied on cigarettes and have appealed to the government citing losses being incurred by both the exchequer and domestic tobacco companies.

“We would like to appeal to government to have a taxation policy that disincentivises cigarette smuggling in India, which will help curb illicit trade and help the Indian tobacco farmer,” said Javare Gowda, president, Federation of All India Farmer Associations(FAIFA). The step comes against the backdrop of the government recently banning e-cigarettes in India, a move that is estimated to have helped domestic tobacco majors.

“High taxation on cigarettes over the years, particularly between 2012-13 and 2017-18, has impacted the legal cigarette industry and provided a huge fillip to the illegal cigarette trade in the country. Incidence of taxes on cigarettes after accounting for the GST cess increase has trebled between 2012-13 and 2017-18,” a TII spokesperson said.

TII further estimated that the government loses around Rs 13,000 crore every year due to the illegal cigarette trade, while the legal cigarette industry has shrunk by around 22% between 2011 and 2018.

“The worst hit has been the king-size segment (greater than 75mm length filter cigarettes). This is the category where numerous smuggled international brands are being offered to consumers at prices below even the taxes payable on such cigarettes,” said the TII spokesperson.

Illegal cigarettes being smuggled into India have their origin rarely identifiable, as the country of manufacturing is deliberately not stated by trade operators and seizure incidents revealed that container loads, railway freight, road transport, personal baggage and head-loads are being used to move stocks across international borders and within the country, according to TII.