Opinion | Smoke and mirrors around India’s ban on e-cigarettes4 min read . Updated: 07 Oct 2019, 10:55 PM IST
While vaping devices are being banned for health reasons, there’s also a pecuniary aspect to it
Last month, the government passed an ordinance to ban e-cigarettes in India. Globally, many countries are evaluating the health risks associated with using e-cigarettes, and India is one of a handful of countries to enforce a complete ban. The ostensible reason is the health risks posed by e-cigarettes and, in particular, the perception among adolescents and the youth that vaping is “cool", making e-cigarettes a potential gateway to smoking regular cigarettes.
India is a large market for tobacco products, but cigarettes make up a small part of that market. According to the Tobacco Market In India (2018-2023) report, cigarette and beedi consumption is only 8% of the total tobacco consumption in India. Another large market is oral or chewable tobacco, in a variety of forms like khaini, gutkha, pan masala, mawa and snuff. The health impact of smoking is now well established. But less known is the impact of chewing tobacco, which poses a far higher risk of cancer. According to the World Health Organization (WHO), a range of studies shows a strong link between chewing tobacco and the rising rate of oral submucous fibrosis and a variety of leukoplakia and pre-cancerous oral lesions which can develop into oral cancer. Consequently, the WHO recommended a ban on chewed tobacco products in India.
Yet, in India, traditionally smoked and chewed tobacco are legal. And this is not because the government is not familiar with their harmful effects. Aside from mandatory statutory warnings, the labelling of products, and a ban on advertising tobacco, the government actively campaigns to warn tobacco users. Moviegoers must sit through health warnings against tobacco products at the beginning of a screening as well as during any scene that depicts smoking. The dramatized story of 24-year-old Mukesh, who died from cancer because he chewed tobacco in the form of gutkha, is now etched in our minds. And yet, none of these products is banned. On the other hand, e-cigarettes, which do not seem to pose higher risks compared to regular cigarettes or chewed tobacco, were hastily banned.
Why has the government shown such alacrity in banning e-cigarettes? While the ostensible reason is health, might the answer lie in pecuniary incentives? E-cigarette bans have gone alongside a demand for regulation/prohibition emerging from a coalition of special interests that fits the Bootleggers and Baptists theory of regulation by American economist Bruce Yandle. Analysing the prohibition of the sale of liquor on Sundays in the southern states of the US, Yandle showed that both Bootleggers and Baptists benefit from this prohibition. The Baptists serve a high moral purpose when alcohol is prohibited on Sunday. And when the law is enforced, the Bootlegger eliminates competition one day a week, and is able to profit from raised alcohol prices. These strange bedfellows seeking the same policy outcome make it easy for political actors to enforce prohibition by providing a moral reason that masks commercial interests.
The global movement in favour of banning e-cigarettes seems no different. The Baptists in this case are concerned health professionals and worried parents of school-goers. The bootleggers, who directly profit from eliminating competition from e-cigarettes, could be big tobacco (traditional cigarette companies) and big pharma (selling nicotine reduction therapeutic products like nicotine gum and patches).
While this explanation describes the kinds of regulation and bans against e-cigarettes in Western countries, in India, the incentives of bootleggers and the government appear even more entangled. Though cigarettes are a small part of the tobacco market, the cigarette market is dominated by one firm, ITC Ltd, which accounts for over 85% of sales, making the cigarette industry highly concentrated and well-organized. Second, the Indian government benefits from the ban directly, since the government and state-owned companies (like Life Insurance Corporation of India) together hold a stake of over 28.6% in ITC Ltd. Third, cigarettes are taxed at relatively high rates in India (64% excise duty, 28% GST, and 5% cess), and legal cigarettes account for less than 10% of consumption but almost 86% of tax revenues from tobacco. It’s clear that a ban on regular cigarettes would deprive the government of an important source of revenue.
E-cigarettes pose some health risks, but the extent of the risks is not yet fully known, which is a source of panic. Of the known health risks, the most severe seem to emerge from black market variants of e-cigarettes laced with prohibited substances in addition to nicotine. More research is definitely required on this product and rather fledgling market in India. However, from the research available so far, e-cigarettes pose no greater risk than regular cigarettes or chewed tobacco. In fact, e-cigarettes eliminate third-party risks, unlike regular cigarettes that create health problems from passive smoking. Also, compared to chewed tobacco products, e-cigarettes seem safer. In other words, so far, e-cigarettes seem no worse, and given time and research, might even prove better than the alternatives. And yet, e-cigarettes have been eliminated as an option.
This is problematic, and potentially dangerous, because in banning e-cigarettes prematurely, the government is eliminating a line of substitutes for hundreds of millions of consumers that may reduce their reliance on potentially more harmful tobacco products.
Shruti Rajagopalan is a senior research fellow with the Mercatus Center at George Mason University, US.