Irony of Indian Cigarette market

Today I will delve with you into a product market which has been despised by many health conscious communities. For the record I do not support smoking, but, that’s not why I’m here today. Economically this market actually does suffer a lot more than being just. Let’s see how and why I say this. Before that please bear with some background.
I have kept it short. pinky swear :p

From Mukesh to Akshay Kumar, ‘Quit Smoking’ campaign have been picking up strength for many years. According to WHO, evidences have shown that increase in price on cigarettes are highly effective in significantly reducing demand of this commodity. A 10% increase in price would result in about 4–5% decrease in demand.

This is usually achieved by the governments by levying heavy taxes on cigarettes. The tax collected mainly contribute to cancer research, in Cessation programs, like showing all those grotesque images on the packing of the box of cigarette. As a matter of fact, GOI specifies that health warnings and messages on tobacco product packaging and labelling should be 50% or more of the principal display areas.

Records of GOI highlight the phenomenal success in battling smoking compared worldwide. The following graph indicates per capita cigarette consumption. In simple terms it represents the number of cigarette sticks being smoked by an individual of a nation in a span of one year.

Surprisingly the data is 100% authentic.

Isn’t it perfect for us!

Ummm… NO! :(

So, here is the story. The data posted is for the legal cigarettes in India. LEGAL!?
Yup, Illegal market of Cigarette in India is HUGE. I mean ‘Pokemon Snorlax huge’ man. These smuggled cigarettes do not pay any custom duty, do not comply with statutory warnings like displaying of grotesque images, which mislead many innocent consumers that these are safer than the rest. India is among the top 4 illegal market in the world for cigarette sticks. In fact, smuggled comprises a quarter of the entire cigarette market in India. According to Euromonitor, market research company, and Tobacco Institute of India as well, illegal trade doubled from 12.5 to 26.5 billion sticks between 2005–18.

In most of the Northern India, specially mountains, shopkeepers promote brands that have been smuggled from Nepal. While poor Indian brands like ITC, post budget 2020, saw a hike of 10 % in price from Rs. 200 to Rs. 220 for a pack of 20 cigarette to manage their profits, whereas smuggled ones cost shopkeeper only Rs. 80 for a pack of 20 king size sticks.

Such steps by Government provide fillip to illicit trade operations which view India as a potential market for smuggled cigarettes. On the contrary the legit like tobacco farmers who have their lively hood dependent on the commodity face worse than an already bad situation. It’s ironical that the steps taken by the government in favor of its citizens and for their better health eventually give rise to misleading data and even worse it proves boon to illicit activities.

Budget is around the corner I think Finance Ministry should address this issue of market and my brother Ayush, who hates smoking by the way, will go gala buying shares of ITC:P

till we meet again…