TC, which closed all its cigarette units on the graphic health warning issue, is unlikely to resume production till clarity emerges in the current government rules.
“ITC has been compelled to shut its cigarette factories from April 1, 2016,” the company said in a filing with the stock exchanges.
It has five cigarette units across the country in Bengaluru (Karnataka), Ranjangaon (Maharashtra), Munger (Bihar), Saharanpur (Uttar Pradesh) and Kolkata (West Bengal).
The company, partly owned by British American Tobacco, declined to give the capacities at these units or the number of workmen affected by this move.printers and packet-makers are liked to be impacted severely if this continues, it is learnt.
“Even as the Parliamentary Committee was actively engaged in hearing and considering the representations of various interested parties, the Ministry of Health and Family Welfare, contrary to its earlier decision to await the committee’s findings, notified on September 28, 2015 that the new warnings would come into effect April 1, 2016”, according to the filing. The Rajasthan High Court, on September 10, 2015, hearing a contempt petition, had said that 85 per cent of the packing should be used for pictorial warning.
On March 15, 2016, the Parliamentary Committee tabled its report recommending that new health warnings should occupy 50 per cent of the front and back panels of the cigarette pack (a against the current mandate of such warnings occupying 40 per cent of the front panel).
“The company is at present not in readiness to print the health warnings as now once again notified” the letter said. For the year ended March 2015, the company reported gross revenues from the cigarette unit of Rs 30,452 crore. Across all its divisions, the company employed nearly 26,000 people at the end of that year.
Taking note of these developments, the Tobacco Institute of India (TII) said in a statement that ambiguity on graphic health warnings had forced Indian tobacco industry to halt production. TII’s members, who account for 98 per cent of the country’s domestic sales of duty-paid cigarette have decided to shut their units with an estimated production revenue loss of over Rs.350 crore daily.
Syed Mahmood Ahmad, Director, TII, said: “The Indian tobacco industry has written to Ministry of Health & Family Welfare on March 15, 2016, seeking clarification on the issue, but fearing potential violation of rules by continuing production, TII members have decided to shut their units.”
The TII claimed that the extreme warnings would promote illegal cigarette trade and adversely affect the livelihood of 45.7 million people dependent on tobacco which included farmers, labour and others in the value-chain.
The legal Indian cigarette industry (or, that part of the industry that complies with tax and other rules) has been facing a continuous drop in demand because of high taxation and the growth of duty-evaded illegal cigarettes that do not carry pictorial warnings. As a result, legal cigarettes today represent only 11 per cent of tobacco consumption in India, it said.
The shrinking domestic industry has adversely affected the entire value chain with Indian cigarette-tobacco farmers facing unprecedented hardships. The resulting loss in earnings of farmers and the acute financial distress faced by them has already led to many cases of suicides by farmers in the tobacco-growing States of Andhra Pradesh, Telangana and Karnataka, according to TII. Further, other contributors in the value-chain such as distributors, printers and packet-makers are likely to be impacted as well, it is learnt.
TII is a representative body of farmers, manufacturers, exporters and ancillaries of the cigarettes’ segment of the tobacco industry in India.
The World Health Organization estimates that 13 per cent of India’s population, or about 111,856,400 people, smoke cigarettes. “If tobacco control efforts continue at the same intensity, WHO projects that in 2025 around 8 per cent of the population (approximately 83,514,000 persons) will be smokers,” according to a 2015 WHO report on global trends in prevalence of smoking.
Official commentsOur Delhi Bureau adds:
Commenting on the stalemate between the tobacco industry and the Health ministry, an official in the ministry, requesting anonymity, said, “There is absolutely no ambiguity about the new regulations. The companies have known for long that the warnings will be increased to cover 85 per cent of the packet from April 1. We will be increasing the graphic, pictorial warnings as per our commitments under Cigarettes and Other Tobacco Products Act (COTPA)."
Dr. Monika Arora, Director, Tobacco Control Division of the Public Health Foundation of India, said, “The notification was put out last year and recently the ministry had put out a public notice informing companies about the new regulations. The companies should have prepared better. There is no scope for ambiguity as the ministry had clearly stated that companies can pick up CDs if they want more information about the notification, so that they know exactly what pictures are to be used from April 1 onward.”
