India Slashes Penalty for Overproduction

India’s Ministry of Commerce and Industry has cut the penalty on “excess” tobacco produced during the 2021-2022 cropping season by 50 percent to help growers compete on the world market, reports The Hindu.  

To prevent overproduction, Indian regulators set a crop size target prior to each production season. Growers who exceed the authorized volume must pay a penalty.

Following the penalty reduction, authorized growers must pay INR1 ($0.01) per kg and 5 percent of the value of their excess production during the 2021-22 cropping season. However, unregistered growers have to pay the old rates.

Tobacco growers welcomed the decision. “We can confidently raise the crop without fearing the penalty to achieve the economies of scale,” said B. Ramaanjaneyulu.

The Tobacco Board authorized production on 27,818 hectares in the Southern Light Soils region and 22,014 hectares in the Southern Black Soils region of Andhra Pradesh.