Rakesh Kumar Koul, Tobacco Institute of India general manager. Photo credit: International Tobacco Growers’ Association
Tobacco, being an important cash crop, generates enormous socio-economic benefits in India in terms of remunerative agricultural employment, tax revenue, and foreign exchange earnings, etc. India is the second largest producer and a leading exporter of tobacco in the world with 45.7 million Indians dependent on tobacco for their livelihood.
Tobacco products generate tax revenues amounting to more than US$8 billion annually. In addition, foreign exchange earnings through the export of tobacco & tobacco products garner about US$1.2 billion per annum.
According to a study by an Indian industry body, ASSOCHAM, the tobacco sector in India contributed around US$150 billion to the country’s economy in 2019. The study notes that tobacco contributes a significant percentage of the total value of commercial crops in India generating huge socio-economic benefits in terms of agricultural employment, farm incomes, revenue generation, and foreign exchange earnings.
Different varieties of tobacco such as flue-cured virginia (FCV), burley, oriental, bidi, and chewing, are presently grown across 13 states in India. India is the 4th largest producer of FCV tobacco in the world with FCV being the most remunerative variety with huge export demand.
The current tobacco control law, namely the Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COTPA) in India is amongst the most stringent in the world, particularly when compared with other tobacco producing countries.
A recent study by National Law University (NLU), Delhi titled “Regulation or Overregulation: An Impact Assessment Study” observed that regulations in India often go beyond those implemented by countries which do not grow tobacco and have no livelihood dependence on this industry. The study acknowledged that the entire legal tobacco industry complies with these regulations. “However, restricting the industry further through more regulations would substantially increase the cost of compliance and would expand the parallel illegal industry, which does not follow single compliance,” the study cautioned.
In fact, India is one of the few countries in which cigarette tobacco, namely FCV crop production, is regulated. While the annual production limit for FCV tobaccos is fixed by the Tobacco Board, a Government of India body, the sale of the crop is managed by the Board via a transparent e-auctioning system.
Advertisement of tobacco products is prohibited in India and shops selling tobacco products are required to display a warning board with pictorial warnings against sale to minors. Further, India mandates placement of anti-tobacco health spots at the beginning and middle of films and television programs displaying tobacco products or its use, along with a static warning message during the period of such display. Recently, India became the only country in the world to have extended similar regulations to online streaming platforms. On World No Tobacco Day (May 31) last year, the Union Health Ministry mandated all over-the-top (OTT) streaming platforms showing tobacco products or their use to display anti-tobacco health spots at the beginning and middle of the program and also during the period of tobacco display.
Pictorial warnings in India are presently mandated to cover 85% of the front and back of tobacco product packs. By virtue of this, India is ranked 8th in the world by the size of warnings, whereas the global average warning size is less than 45%.
Besides extreme regulations, cigarettes have been subjected to punitive and discriminatory taxation in India over the years. As per the WHO report on the Global Tobacco Epidemic 2021, cigarette taxes in India in terms of percentage of per-capita GDP are amongst the highest in the world. With such high levels of taxation, the affordability of legal cigarettes in India is significantly lower than most developed economies and even some of our neighboring countries. In fact, India is one of the least affordable cigarette markets in the world.
The unaffordability of legal cigarettes led to a shift in consumption from legal tax-paid cigarettes to cheaper forms of tobacco consumption including tax-evaded smuggled cigarettes.
Extreme regulations like large pictorial warnings and the excessive taxation on cigarettes in the country has resulted in huge growth of illicit cigarette trade, which now represents 1/4th of the Indian cigarette market. As per Euromonitor International, India is now ranked as the 3rd largest illicit cigarette market in the world.
The growing illicit cigarette trade has had a severe impact on the Indian FCV tobacco farmers, as contraband products do not use locally grown tobaccos. FCV tobacco production has dropped by a steep 40% between 2013-14 and 2021-22, resulting in shrinkage in earnings and loss of an estimated 35 million man-days of employment in tobacco growing areas.
The WHO Framework Convention on Tobacco Control (FCTC) is holding the 10th Session of the Conference of the Parties (COP10) in February 2024 which poses a fresh threat to the tobacco sector. It is highly likely that this bi-annual meeting would come up with harsh and impractical policy measures without understanding the ground realities of the tobacco sector. Extreme policy recommendations by FCTC, seeking excessive cigarette taxation, large pictorial warnings, etc. have already resulted in adverse consequences for the legal cigarette industry and the farming community in India.
Worryingly, FCTC processes have become increasingly undemocratic, non-participatory, and opaque over the years with decisions made behind closed doors denying access to media, the public, and tobacco growers and other stakeholders from the deliberations. In fact, it is ironic that tobacco farmers, farmer organizations and other stakeholders who are directly affected by FCTC proposals are deliberately kept out of the FCTC Meetings.
The non-transparent manner in which the FCTC sessions are conducted defy international norms and standards that should govern the conduct of international organizations including the FCTC. Further, tobacco growers, experts, and relevant bodies with the necessary technical knowledge on tobacco growing should be allowed to participate in FCTC discussions in order to safe-guard the livelihood of tobacco growers and other Industry stakeholders.
Globally, cigarettes remain the dominant form of tobacco use accounting for 90% of tobacco consumption. However, in India legal cigarettes represent a small 9% of overall tobacco consumption. The majority 91% of tobacco consumption is in the form of 29 tax-inefficient tobacco products such as bidis, chewing tobacco, khaini, etc., and illegal cigarettes.
Recommendations made by WHO FCTC are ‘’one-size-fits-all” solutions based on a western model of tobacco consumption. They do not necessarily serve the purpose of tobacco control or revenue enhancement in a country like India where tobacco consumption is unique and a large proportion of tobacco consumption is either lightly taxed or even evade taxes.
According to the Provisional COP10 Agenda, released by the FCTC Secretariat, implementation of Articles 9 and 10 on tobacco content regulation and disclosure will be discussed during the meeting. Implementation of these Articles could have adverse and devastating consequences on Indian farmers and tobacco crop production. The guidelines to Articles 9 & 10 are so broadly drafted that they prohibit all ingredients/additives used by the tobacco industry.
There is no evidence, scientific or otherwise, to suggest that a ban on ingredients/additives or an arbitrary reduction in nicotine levels in tobacco or tobacco products would reduce initiation, encourage cessation, or reduce consumption. Tobacco, being an agricultural crop, has its own variations, both seasonal and regional, and hence, additives are often needed to ensure processability and manufacturability of tobaccos grown by Indian farmers.
Tobacco farming in India uses only 0.24% of the total arable land area and the crop is grown largely in semi-arid and rain-fed areas where cultivation of other crops is not equally remunerative. Farmers in India grow tobacco out of choice in these regions due to the economics of this crop. Studies conducted by government bodies have also outlined that no single crop is more remunerative than FCV tobacco in the region.
There are instances of FCV tobacco farmers suffering huge loss as they switched to alternative crops such as bengal gram and chilli, making them return to tobacco in the following year. Even WHO, which has been campaigning for alternative crops in place of tobacco under the guise of FCTC, has not been able to suggest an equally remunerative alternative crop to tobacco.
Though not in the COP10 Agenda, FCTC Article 17 on promoting economically viable alternative to tobacco remains the most threatening provision, having a direct impact on the farming community. Any move to arbitrarily reduce tobacco cultivation would have a devastating impact on India’s export performance and on the livelihood of millions of farmers, farm workers, and their families.
Policies on tobacco crop substitution in India should take into account economic, trade, and employment issues of India. All stakeholders, including tobacco farmers and subject-matter experts, should be consulted in policy formulation in this regard. We hope the COP10 meeting does not come up with ill-conceived policy measures on issues like alternative cropping which will have a devastating impact on India’s export performance and on the livelihood of millions of farmers, farm workers and their families.
Tobacco is an important cash crop, generating significant socio-economic benefits in India and other tobacco growing nations, in terms of gainful agricultural employment, tax revenue, and foreign exchange earnings. It is therefore important that the governments of these nations undertake prior consultation with farmers and other industry stakeholders and seek their representation in FCTC meetings.
The governments of tobacco growing nations should not be influenced by the propaganda of the international NGOs who want unreasonable regulations and should instead promote a balanced approach towards tobacco control. Tobacco regulations in these nations should be specifically adapted to the conditions prevailing locally so that they do not harm the livelihood of millions who are engaged in the tobacco industry. The government of India and other tobacco growing nations should join hands striking a balance between adopting WHO proposals, which are merely recommendatory in nature, and livelihoods of millions of small farmers and rural workers in these nations by supporting pragmatic tobacco policies.