Local Brands of Cigarettes Flourishing in Smaller Cities

In addition to the organized sector in tobacco cigarettes that have 4-5 major players like ITC, GTC, GPI etc – there is a huge semi organized parallel tobacco cigarette industry – proliferating in tier II cities across states like UP, Bihar, MP, Chattisgarh. Reports say that some of these players counterfeit or copy the major brands and are mostly fly by night operators while some local manufacturers have their very own local brands. And these manufacturers seem to be the Most Prosperous Lot.

Are they impacted by the Tax Increase in Tobacco – not quite since their pricing depends on the comparative prices of the better known brands, since they sell at much lesser the cost targeting the price sensitive aspirational but poor man of small cities and towns.

Unbelievably some of these cigarettes are sold at much lower costs than the excise and vat component on them – therefore pointing to the fact of complete tax evasion.

Says a local consumer - He knows it’s the same cigarette –“bus naam he toh badalta hai”.

Avinash Society, a registered NGO Crusading against Substance Abuse and Tobacco, has given a Representation to the Union Government as well as State governments on this specific Issue. Commenting on the same, Dr Harish Bhalla – a renowned de-addiction expert and Hony. Gen. Sec of Avinash commented – “ We have been campaigning to surface the issue of toxicity in tobacco products in India. As part of the Continued Medical Education Programs (CME) in MP, Chattisgarh and UP we found the existence of these local Cigarettes, which were being consumed by the locals selling at almost the price of Biris.” We are very concerned that these products in the absence of checks and controls could be highly toxic and very hazardous to health indeed”. The NGO surfaced the aspect of the possibility of the major cigarette players being behind this organized racket.

On the regulatory front – Cigarettes is a Scheduled Industry and thereby Licenses are granted by the Central Government. But interestingly, the local players registered as Small Scale Industry Units are able to procure licenses for cigarettes – a product covered under the First Schedule of the Industrial Development & Regulation Act (IDR). It is estimated that this possibly results in a loss of crores in Revenue every year.

It is not certain whether these local players are backed by the larger players or not but one thing for sure is that their existence is known so the food for thought really is – Why is the Government Sleeping Over it?