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Allow FDI in tobacco, demand growers

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Special Correspondent

`It will help us get remunerative prices'

BANGALORE: The Virginia Tobacco Growers' Association of India on Wednesday demanded that foreign direct investment (FDI) should be allowed in the county's tobacco sector to get remunerative prices for the tobacco farmers and also to develop the tobacco sector by boosting exports.

Addressing a press conference here, association honorary president and former MP Y. Sivaji claimed that Indian tobacco farmers were not getting remunerative prices for their produce as the domestic trade was monopolised.

Local consumption

Of the 250-million kg tobacco production in the country, about 100 million kg were being consumed by domestic cigarette manufacturers, led by a single largest manufacturer, he said.

The rest was exported by a small group of exporters attached to two international merchants.

Lack of competition had affected the tobacco farmers so much that they were not even getting reasonable prices to sustain their cultivation, he claimed.

At the same time, the multinational cigarette and leaf merchant companies were sourcing their requirements only from a few countries such as Brazil and Zimbabwe where they had investment interests.

Good quality

Though Indian tobacco was known for its superior quality, multi-national companies had not preferred it as they did not have any investments in India, which is the third largest tobacco producer in the world.

Dr. Sivaji, who was part of the farmers' delegation that recently visited Brazil and Zimbabwe for a study, expressed the confidence that Indian tobacco will be in demand in the international market and the Indian tobacco farmers will get remunerative prices if the trade monopoly was removed by allowing foreign direct investment in tobacco cultivation, processing and cigarette manufacturing.

A memorandum in this regard has been submitted to Union Commerce Minister Kamalnath, he said.

Tobacco Board member D.M. Abu Mohammed told The Hindu that the issue would be taken up with the Industrial Licensing Authority also.

Price situation

Explaining the price situation, Dr. Sivaji noted that the tobacco farmers in Brazil and Zimbabwe were getting about U.S. $ 2 per kg as against the U.S. $ 1 per kg for Indian tobacco.

While the price of cigarettes in India had increased more than four times since 1991, the price of tobacco had gone up only marginally from Rs. 33 per kg to Rs. 46 per kg in the last 16 years due to the lack of competition among traders, he said. He pointed out that Indian tobacco had least nicotine content when compared with the tobacco produced in other countries.

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