The Indian cigarette market can be segmented
on the basis of length and filter / non-filter categories.
During Apr - Nov 01, cigarette production declined
by 18% as compared to a 9% decline in the corresponding period of the previous
year.
Though volumes have declined, increasing share
of high-priced filter cigarettes has resulted in the market growing in value
terms.
The domestic cigarette industry is increasingly
under threat from smuggled brands.
Cigarette being a highly taxed industry, its
contribution to the state's exchequer has been continuously increasing. From
7% in FY88, the industry’s share in total excise collection has increased
to 12% in FY01.
Inputs Tobacco and Paper
Duty Structure
Customs Duty (Basic)
Products
2000-01
2001-02
Cigarettes
35%
35%
Excise
Duty
(Rs per thousand sticks)
Products
2000-01
2001-02
Non
filter Cigarettes
<
60 mm
115
135
60
mm – 70 mm
390
450
Filter
Cigarettes
<
70 mm
580
670
70
mm - 75 mm
945
1,090
75
mm - 85 mm
1,260
1,450
>
85mm
1,545
1,780
Biris
6
7
Major announcements in previous
year’s budget
An extra levy called National Calamity
Contingency Duty (NCCD) was imposed on cigarettes, pan masala, biris and other
tobacco products.
Industry’s demands from Union Budget
2002-03
Some of the demands made by Tobacco
Institute of India are as follows:
Specific duty structure based on the length
of cigarettes should be retained
NCCD should be withdrawn
Current excise duty
rates should not be increased.
Cigarettes should be the exception to VAT regime
as recommended by various authoritative studies. States should be discouraged
from levying other taxes.
Wide difference in tax rates between cigarettes
and other tobacco products as well as other exemptions favouring the latter,
should be reduced.
Key Players
ITC, Godfrey Phillips India, VST
Industries and GTC Industries
