A QUICK OVERVIEW
Apart from any other business of drugs, tobacco is one of the product obtained from the natural tobacco leaves. In India, and in any other country, people have become way dependent on drugs, nicotine, and similar things.
This somehow shows that tobacco is one of the easiest measures used for addiction. Drug manufacturers use tobacco in cigarettes, and even directly.
Generally, many people fall into the trap of addiction and it becomes way difficult for them to overcome this situation. Hence, to put an end and to control the habit of addiction in youth and people, the Ministry of finance and health has taken a few steps.
HOW TO TRACK THESE ACTIVITIES
Keeping in mind the current scenario and the rapid increase of drug addiction majorly in youth. From now on, India will track the movement of tobacco products in the country to curb tax evasion and illicit trade and meet the World Health Organization’s protocol.
Reports say the Officials from the ministries of finance and health have already met once on the WHO’s Framework Convention on Tobacco Control. The panel is continuously focusing to deliberate on creating a nodal body that will be in charge to implement the changes and also identify amendments needed in the law.
However, the outcome of the meeting says, such a change will take around three years. India is studying a model by countries like Brazil and Turkey.
The WHO requires countries to establish a tracking and tracing regime within five years of becoming signatories to the protocol. However, Legal cigarettes account for only 11 percent of the tobacco consumed in India, according to the Tobacco Institute of India whose members account for nearly all the legal sales.
Illegal cigarettes—comprising smuggled and locally made ones on which they do not pay tax—account for around a fourth of the cigarette industry, it said. That results in an estimated Rs 13,000-crore revenue loss for the government each year at current rates.
Tobacco tracking will be positive for companies that are tax compliant.
“Businesses are getting impacted by injurious imported products on which it does not pay duty, and this will also help the government in earning more tax revenue.”
How Will It Work?
In India, 90 percent of the consumption is in the form of chewing tobacco, beedi, khaini, and illegal cigarettes. This is unlike the rest of the world where tobacco is synonymous with cigarettes representing 90 percent of sales.
A key reason for the smaller share of cigarettes in the country, according to the tobacco institute, is a high tax—up to 51 times more than other products.
Smugglers of global brands seek overseas markets with attractive tax arbitrage and move consignments through land and sea. “India with its punitive taxation on cigarettes provides lucrative prospects. Apart from this, it is a preferred destination for smuggled cigarette trade operators.”
They rarely identify contraband consignments, and it does not state the country of manufacture. That makes it impossible for probe agencies to take help of other countries to prevent the illegal trade, he said.
In India, identifying legal cigarettes is easy. This is so because the smuggled ones cover 85 percent of both sides of the pack. Despite that, enforcement agencies are not able to contain the growth in the illegal trade.
The WHO Illicit Trade Protocol will check to smuggle only when countries from where illegal cigarettes enter India implement the protocol and tracking systems. And unless they share inputs in real time, India cannot meet the objectives of the protocol, he said.
However, rolling out the tracking and tracking system will take time but it’s a right move in the larger interest of the government and the industry.
CONCLUSION
Increase in Cigarette Price
The track and trace system will increase the cost base for domestic cigarette makers. It would only increase the margin for smugglers. “It is the smuggled international brands and the accompanying global illegal cigarette trade that requires monitoring and surveillance.”