ITC Logo
Media Centre
Press Report

ITC seeks reformed legal regime for tobacco sector
The Hindu Business Line - 02 Jul 2001

C.R. Sukumar

Hyderabad, July 1

ITC Ltd. the country's leading player in cigarettes and cigarette leaf tobacco, has submitted a set of comprehensive recommendations to the Government seeking reforms in the legal framework pertaining to the domestic tobacco industry and stressed on the need for an effective enforcement.

The tobacco major is of the view that loopholes in the existing regulatory framework and lack of effective enforcement have led to a flourishing trade in smuggled cigarettes.

The contraband trade was estimated to be causing a national loss of over Rs.1,000 crore per annum on a conservative basis.

ITC cautioned the Government that the contraband trade was estimated to be growing at a rate of more than 20 per cent per year. It has also submitted to the Government that one-third of the total world trade in cigarettes was contraband in nature.

The tobacco major is of the view that the smuggling of cigarettes, which appears to be highly organised, is being provided an opportunity through lifting of quantitative restrictions on the import of cigarettes into the country.

According to ITC officials, "the regulatory framework in respect of tobacco products needs to be pragmatic and equitable, such that the regulation of tobacco consumption is orderly and progressive, securing maximisation of economic contribution even in a shrinking basket of tobacco consumption."

The Cigarettes & Other Tobacco Products Bill - 2001, the intent of which was to regulate promotion of all tobacco products, in its current form would result in more stringent regulations on cigarettes as compared to any other tobacco product, the company opined.

"For example, the proposed Bill makes the regulations governing cigarettes applicable to the whole of India, while leaving it to the option of the individual States to apply these regulations to all other tobacco products. Also, the declaration of nicotine and tar content is sought to be made mandatory only for cigarettes, and not for other tobacco products which account for nearly 84 per cent of the tobacco consumption in the country."

Further, it was submitted that such differential treatment would cause a further shift to other forms of tobacco consumption which would lead to a significant reduction in the economic contribution from the tobacco sector without reducing consumption of tobacco among the economically disadvantaged sections of the society.

On prohibition of sponsorships and advertising in respect of all tobacco products in the electronic and print media sought by the Bill, the ITC officials said :

"In a globalising economy, where a significant share of media could be controlled by entities outside India, implementation of the proposed ban on communication would not only prove cumbersome, but would also provide an unintended and unfair advantage to foreign cigarette brands that continue to target the Indian market using such communication channels, thereby also providing a fillip to contraband trade."

ITC is of the view that such an inequity would seriously hamper the development of Indian brands, which were vital for the Indian enterprises to become internationally competitive.

The tobacco major hoped that the Government would take into account and consider the views of all constituents of the tobacco industry before formulating any legislative measures.