High taxation urged on illegal cigarettes

The Tobacco Institute of India (TII) has urged the government to slap high taxation on the cigarette smuggling syndicates under the GST norms aimed at curbing the illegal industry.

The TII -- a representative organisation of manufacturers, farmers, exporters -- has also said that the step will provide relief to distressed tobacco farmers, the legal cigarette industry and also inject buoyancy in revenue collection from this sector.

India is the fourth largest illegal cigarette market in the world.

According to TII, since contraband products do not use locally grown tobaccos, illegal trade affects demand for domestic tobaccos, thereby impacting the earnings and livelihood of tobacco farmers in the country.

"The illegal trade in cigarettes in India, like the rest of the world, is controlled by criminal and terrorist organisations. Internationally, it has been determined that profits from cigarette smuggling have been used to fund criminal and terrorist activities posing a huge threat to national security," the TII said in a statement.

Legal cigarettes in India account for just 11 per cent of the overall tobacco consumption.

The rest 89 per cent is represented by traditional products like chewing tobacco and 'bidis'.

"The Goods and Services Tax bill presents a unique opportunity to the government to address the growing illegal trade in the country," said TII Director Syed Mahmood Ahmad.

He said that recent seizures of smuggled cigarettes by enforcement agencies are only "the tip of the iceberg of a much larger and threatening operation".

On March 17, Customs officials seized illegal cigarettes worth Rs 10.38 lakh in Coimbatore soon after seizing Rs 38.65 lakh on March 15.

On March 3, Directorate of Revenue (DRI) officials arrested three individuals for illegal possession of a large consignment of foreign brands worth Rs 15 crore in Noida.

On January 31, smuggled cigarettes valued at Rs 2.2 crore were seized in raids at Mumbai's Nhava Sheva port.

On January 3, a joint team of State Tobacco Control and the police intercepted cigarette packs being sold openly in a Chandigarh mall without the required pictorial warning.

Illegal trade in cigarettes in the last five years has seen a huge surge.

A report by the Federation of Indian Chambers of Commerce and Industry (Ficci) estimates the overall market for illegal cigarettes in India at a significant 20.2 per cent, resulting in a huge revenue loss of Rs 9,139 crore to the national exchequer.