The steep hike in excise duty on cigarettes and other tobacco related materials have been in tune with the global position on reducing the consumption of tobacco. With India being a signatory to Framework Convention on Tobacco Control, the Health Ministry has been unveiling a series of drastic measures to cut down cigarette consumption. Wide use of anti-smoking campaigns coupled with steep hikes in excise duties on cigarettes have resulted a fall in sale of cigars in the country.
As expected, cigarette manufacturers have reacted with a sense of disappointment over the steep hike in excise duty. The industry could see it coming after the statement of Union Health Minister Harsh Vardhan sounding that there could be a steep hike in excise duty on tobacco products.
“This hike is too steep and will open the door for entry of illicit trade in the country. Cheap and low quality cigars will now enter the markets,’’ said a senior manager of a leading cigarette manufacturing company. With cigarettes becoming expensive, the manufacturers fear a dip in sale.
“The government has been hiking duties on cigarettes for the last two years and we expected a moderate hike, but this one is steep,’’ said another trader.
The sale of cigarettes which dropped by 9 per cent during 2013 was further expected to take a dip, said an analyst. The cigarette industry in the country is worth Rs.5,500 crore. But the entry of cheap and illegal cigars could also result in fall in revenue.
