From Our Special Correspondent
Daijiworld Media Network

Bengaluru, Dec 18: The Federation of All India Farmer Associations (FAIFA), a non-profit organization representing farmers and farm workers of commercial crops across Andhra Pradesh, Telangana, Karnataka, Gujarat and some other states, has urged Finance Minister Nirmala Sitharamn to save their livelihoods hit by rising illicit cigarette trade in India.

In a memorandum submitted to the Union Finance Minister on Wednesday, the FAIFA said higher taxation, smuggled, illicit and contraband cigarettes along with one sided WHO regulations had severely hit the Flue Cured Virginia (FCV) tobacco production and the livelihood of tobacco growers.

The memorandum, whose copies have also been submitted to Prime Minister’s Office and various other ministries such as Health and Family Welfare, Agriculture, Commerce and Industry and Labour, pointed out that FCV tobacco production has come down sharply from 325 million kgs in 2013-14 to 210 million kgs in 2019-20 and a loss of over Rs 5,000 crore to the FCV tobacco farming community.

Based on the current tax rates on cigarettes, it is estimated that the Government also suffered losses of Rs. 13,000 crores per annum on account of illegal cigarette trade.

Javare Gowda, FAIFA President, said, “'The FCV Tobacco Farmer is on verge of losing his one and only livelihood due to increase in input costs and drastic decrease in income which is caused by Illicit cigarette trade in India. We would like to appeal to Government to have a taxation policy that dis-incentivizes cigarette smuggling in India, which will help curb illicit trade and increase the demand of domestic Indian grown tobacco.”

The FAIFA said illegal Cigarette trade comprising international smuggled and locally manufactured tax-evaded cigarettes accounts for as much as 25% of the Cigarette Industry in India, making country the 4th largest illegal cigarette market in the world and clearly a preferred destination for international cigarette smugglers.

The entire legal cigarette value chain is presently reeling under penal taxation on account of continuous increases in excise duties and compensation cess on cigarettes, which have cumulatively gone up by over 200% from the years 2011-12.

As a result of high taxes and growth of illegal cigarette trade, Legal cigarettes have dropped by more than 25% between 2011-12 and 2018-19, while illegal cigarettes have grown by 31% during the same period.

India is the second largest producer of Tobacco in the world, Javare Gowda said pointing out that tobacco is cultivated in 13 States in the country and is providing livelihood to 4.5 crore people that includes crores of farmers, labourers, poor rural population and tribal people and their families.

Murali Babu, General Secretary FAIFA, said, “The Government has made very harsh tobacco regulations and imposed very high taxation on cigarettes without caring for the outcome of such measures on livelihood of crores particularly the farmers, retailers, rural poor and tribals engaged in tobacco and who do not have any other source of income.”

The availability of International Smuggled Cigarettes has spread all over the country. These smuggled cigarettes also do not carry the mandated pictorial warnings and more importantly they does not use our domestic legal FCV tobacco produced by Indian farmers.

In recent months, the incidence of seizures of smuggled cigarettes by the Enforcement Agencies, as reported in the media, has seen a sharp spurt in different parts of the country.

However, the reported seizures are only the tip of the iceberg of a much larger operation, as for every seizure dozens of consignments escape any surveillance.

As enforcement measures cannot fully address the menace of the large and growing illegal cigarette trade in the country, there is an urgent need for the Government to make systemic policy intervention with regard to high taxation and excessive regulation in order to adequately deal with the huge Illegal Trade problem.

"We, the farming community appeals to the Government of India to reduce the taxation to revenue neutral pre GST rates to curb illicit trade, increase rural employment and increase the demand of legal, taxpaying home grown FCV tobacco. With folded hands, we request the Government of India to implement our request and save our Livelihood,’’ FAIFA memorandum said.