Cigarette firms halt production on lack of clarity on health warnings
Move will result in a daily production loss of `350 crore and affect the livelihoods of an estimated 45.7 million people dependent on the industry, lobby says
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Kolkata: All leading Indian cigarette companies on Friday halted production, an industry body said in a statement, because of lack of clarity on the size of the pictorial warning that their packets should carry.
This will result in a daily production loss of ₹ 350 crore and affect the livelihoods of an estimated 45.7 million people dependent on the industry, the Tobacco Institute of India (TII), a lobby group, said.
It isn’t immediately clear how long cigarette makers will keep factories shut. Because of the sudden contraction in supply, smokers may soon be asked to cough up more than the mandated retail price.
Companies such as ITC Ltd also fear suppliers of contraband cigarettes will benefit from the suspension of production. Contraband, or tax-evaded cigarettes—mostly imported through illegitimate channels—already account for about 20% of cigarettes consumed in India, according to TII.
The sale of such cigarettes cost the national exchequer an estimated ₹ 9,000 crore in lost tax revenue, TII says.
The Union health ministry had earlier issued a notification asking cigarette makers to more than double the size of the pictorial warning on their packets from 1 April.
However, the government later said a parliamentary panel had recommended only a marginal increase in the size of the pictorial warning—from 40% of the pack front to 50%.
But because there is no clarity on the size of the pictorial warning that packets produced from 1 April should carry, cigarette makers had no option but to halt production, TII said. The lobby said it had written to the Union health ministry on 15 March seeking a clarification, but the matter remains unresolved.
Through TII, Indian cigarette makers have been lobbying for no further increase in the size of the pictorial warning because they fear it could impact sales.
Sale of legitimately distributed cigarettes in India is contracting as cheaper ones with no pictorial warnings make deeper inroads.
TII says the size of the warning on packets is already quite big compared with the world average of 31% of pack front. That apart, some of the biggest cigarette-consuming countries such as the US, Japan and China only have text warnings, TII says.
Introduced in 2009, the pictorial warning on Indian cigarette packets has done its job in spreading awareness about the ill effects of smoking, TII claims, citing a survey conducted by the Union health ministry in 2009-10 which showed more than 60% of consumers knew what the pictorial warning meant.
Meanwhile, the Rajasthan high court passed an order mandating pictorial warnings covering 85% of the packaging surface with effect from Friday.
In response to a public interest litigation by lawyer Rahul Joshi, the court expressed displeasure over non-implementation of the new rules. The court posted the matter for hearing after six weeks.
Jyotsna Singh in Delhi contributed to this story.
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