Govt puffs off 100 cr from its exchequer

New Delhi, Dec 6: Lack of clarity on the pictorial warnings on cigarette packets has led to a potential loss of 100 cr a day in excise for the Central government.

Major players in cigarette manufacturing in India, ITC and Godfrey Phillips has halted production due to this very reason. The cigarette manufacturers are at loggerheads with the government over the extend of visual representation on cigarette packets on the hazards of smoking. The govt wants the pictorial warnings to be changed every year. The manufacturers on the other hand want the warnings to be fixed for 2-3 years. This disagreement has not found a common ground and has catapulted to a bigger problem.

There is a WHO directive to issue pictorial warnings on 30 pct of the area of the cigarette packet. Indian companies, on the other hand, use around 40 pct of the packet to display warnings.

A warning along with graphic visuals of a cancer-stricken mouth is what the Ministry of health and family welfare want along with warning that reads, “smoking kills" and “tobacco causes mouth cancer", from December 1, 2010.

It needs to be noted that India has very low cigarette consumption market. With the present stand-off, the industry is positioned in a very sorry state. ITC was at a dismal Rs 171.40 while Godfrey Phillips closed Rs 2,029.20 at the National Stock Exchange.

India follows mandatory pictorial warning complying with the WHO guidelines and follows strict national regulations like ban on advertising and high rate of taxation. A whopping Rs 27,000 crore is gained from taxes on cigarettes and other tobacco products annually. For a market that produces close to 110 billion sticks each year and no-production for a day could mean a loss a few thousand crores.

"There is no growth in the cigarette industry in the country. In fact, cigarettes account for less than 15% of the total tobacco industry while contributing 70% in revenue and it is heavily taxed too," says the Director, Tobacco Institute of India, Udayan Lall.

OneIndia News.