Tag: India

  • India Faces EU Sustainability Hurdles

    India Faces EU Sustainability Hurdles

    India has become the world’s largest tobacco exporter, with shipments worth $1.2 billion in FY 2023-24—a 19.46% increase from the previous year. Union Commerce Minister Piyush Goyal announced that tobacco exports, including unmanufactured tobacco and processed products, reached a record-breaking ₹12,005.8 crore ($1.5 billion). However, the industry faces mounting challenges as stringent European Union (EU) sustainability standards loom.

    The EU, a key importer of Indian tobacco, is set to enforce regulations under frameworks like the European Green Deal and Carbon Border Adjustment Mechanism by 2026, with full implementation by 2030. These measures aim to ensure sustainability, climate neutrality, and transparency. Experts warn that nearly 50-60% of India’s farm exports, including tobacco, could be impacted due to gaps in technology, training, and resources needed to comply with the EU’s rigorous standards.

    Indian farmers, many of whom are unaware of the impending changes, rely heavily on guidance from the Tobacco Board and the Central Tobacco Research Institute (CTRI). While efforts like promoting organic farming and reducing pesticide use are underway, the industry has yet to develop a comprehensive action plan. Tobacco Board Chairman Yashwant Kumar Chidipothu stresses the need for a gradual transition to meet global standards without jeopardizing the livelihoods of millions of farmers dependent on tobacco cultivation.

    As Europe tightens regulations, experts warn of potential domestic market disruptions, including declining export prices and increased local tobacco consumption. With time running out, the industry must navigate a delicate balance between sustainability and economic survival to retain its position in the global market.

  • India: Over 1,500 Kg of Product Seized in 2024 Virudhunagar Raids

    India: Over 1,500 Kg of Product Seized in 2024 Virudhunagar Raids

    Authorities seized 1,531 kilograms of banned tobacco products in 2024 across 403 shops and 44 vehicles in Virudhunagar, India, imposing fines totaling ₹1.06 crore (US$ 12,340) on offenders. The operations were part of the state government’s initiative to eliminate banned tobacco sales, particularly near schools and colleges.

    Joint teams from the Food and Safety Department and the police conducted 831 raids throughout the year. Offending shops were sealed, and vehicles transporting illicit tobacco were confiscated. In early 2025, additional raids led to the seizure of 16.275 kilograms of banned products from six shops in just four days.

    District Collector VP Jeyaseelan affirmed that strict measures will continue against those violating the ban, underscoring the administration’s commitment to public health and safety. The crackdown aims to curb access to harmful products and deter illegal sales in sensitive areas.

  • India: BJP Leader Condemns Exploitative Prices

    India: BJP Leader Condemns Exploitative Prices

    BJP Jogulamba Gadwal District (India) President S. Ramachandra Reddy has criticized Alliance One International for pricing that he calls exploitative compared to nearby ITC, which he says offers fair pricing. Reddy visited Alliance One’s procurement center near Alampur X Road Market Yard following farmer complaints. Farmers reported deductions of ₹8,000 to ₹10,000 (US$ 93.13–116.41) per quintal under the pretext of moisture content, despite an agreed price of ₹15,500 per quintal.

    Reddy condemned the unfair practices, noting the challenges farmers already face, including rising labor costs, poor yields, and delays in Rythu Bandhu benefits. He warned Alliance One to cease unjust deductions and ensure consistent daily procurement of crops, pledging BJP’s support for farmers if the exploitation persists.

    The visit was attended by several district representatives and party leaders, reflecting a collective effort to address the grievances of tobacco farmers and ensure fair treatment in the procurement process.

  • ITC Misses Profit Estimate

    ITC Misses Profit Estimate

    ITC’s profit rose 3 percent to INR50.78 billion ($604.2 million) in the quarter that ended Sept. 30, missing estimates of INR51.14 billion, reports Reuters. The company cited subdued demand conditions, unusually heavy rains in parts of India and a sharp escalation in certain input costs, among other factors.

    Higher prices of raw materials, such as tobacco leaf and crude oil, also weighed on the consumer goods sector’s earnings for the July-September period. The increase in leaf tobacco prices was partly mitigated through improved mix, calibrated pricing and strategic cost management, according to ITC.

    In the cigarette business, net segment revenue was up 7.3 percent. ITC said the business continues to counter illicit trade and make strategic portfolio and market interventions “with focus on competitive belts to reinforce market standing.”

    The company also noted in a statement that recent stability in cigarette taxes, backed by deterrent enforcement, enabled volume recovery for the legal cigarette industry from illicit trade, leading to higher demand for Indian tobaccos and bolstering revenue to the exchequer from the tobacco sector.

  • India Wants Streaming Anti-Tobacco Messages

    India Wants Streaming Anti-Tobacco Messages

    Photo: Gorodenkoff

    India’s central government wants to require over-the-top (OTT) platforms to display non-skippable anti-tobacco health spots for at least 30 seconds when users begin streaming content, reports The Economic Times.

    According to the draft guidelines, all films released on or after Sept. 1, 2023, must show anti-tobacco health spots of at least 30 seconds at the beginning and middle of the movie. Additionally, these films must display prominent static anti-tobacco health warnings at the bottom of the screen during scenes that depict tobacco use.

    The proposed legislation updates the anti-tobacco regulations issued by the ministry in May 2022.

    “Essentially, streaming platforms will now be required to show these health spots and disclaimers not only at the beginning and middle of programs but also as soon as the platform is opened,” an official source told the Economic Times. “Currently, the health spots and disclaimers are not displayed immediately upon opening the platform.”

    India became the first country in May 2022 to make it mandatory for OTT platforms to show anti-tobacco warnings and disclaimers similar to those seen in theatrical releases and TV programs, prioritizing public health.

    The OTT rules of 2023 took effect on Sept. 1, 2023.

  • Cigarette Business Boosts ITC Performance

    Cigarette Business Boosts ITC Performance

    Photo: sdx15

    Higher cigarettes sales boosted ITC’s overall revenue from operations 7.2 percent to INR182.20 billion ($2.17 billion).

    Net cigarette segment revenue grew 7 percent and segment profit before interest and tax was up 6.5 percent year on year.

    In a statement, ITC said it fortified its product portfolio through “innovation and democratizing premiumization across segments backed by superior on-ground execution.”

    The company reported strong performance in its differentiated variants and premium segment and  sequential improvement in its value segment.

    It said it mitigated the sharp escalation in costs of leaf tobacco and certain other inputs through improved mix, strategic cost management and calibrated pricing.

    The company attributed the strong performance of its cigarette business in part to the India’s stable tax environment.

    “ s seen in the past, stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, enables volume recovery for the legal cigarette industry from illicit trade leading to higher demand for Indian tobaccos and bolstering revenue to the exchequer from the tobacco sector,”  the company wrote.

  • Shareholders Approve Hotels Demerger

    Shareholders Approve Hotels Demerger

    Timon Schneider/Wirestock

    Shareholders on May 6 approved ITC’s plan to demerge its hotels business, reports Reuters.

    The company, which has a substantial cigarette business, announced the demerger plan in July last year and later said that the new entity would be tentatively listed.

    In May, proxy advisory firms Stakeholders Empowerment Services and InGovern Research Services asked shareholders to support the proposal, while Institutional Investor Advisory Services opposed the move.

    The hotels business contributed 4 percent to ITC’s fiscal year 2024 revenue, while its mainstay consumer staples business made up 71 percent of the topline.

  • ITC Reports Growth in Cigarette Business

    ITC Reports Growth in Cigarette Business

    Timon Schneider/Wirestock

    ITC reported gross Revenue of INR694.46 billion ($8.34 billion) for the 12 months that ended March 31, up 6.8 percent over the comparable period a year earlier. Net revenue of conglomerate’s cigarette businesses was up 7.1 percent.

    “After a period of sustained growth momentum, the business witnessed consolidation in volumes on a high base amidst subdued demand conditions in the overall consumption space, even as illicit trade remained at elevated levels,” the company wrote in a statement.

    “Differentiated and premium offerings saw robust traction during the year. Sharp escalation in leaf tobacco prices and other inputs, along with increase in taxes were largely mitigated through improved mix, strategic cost management and calibrated pricing.”

    During the reporting period, ITC launched several new cigarette brands, including Classic Alphatec, Classic Icon and Gold Flake Indie Mint.

    The company continues to be concerned about the strength of the illicit market. While recent stability in cigarette taxes has enabled the legal cigarette industry to claw back some of the volumes lost to illegal traders, India remains the world’s third largest illicit cigarette market, according to ITC, with tax-avoiding products accounting for roughly one-third of the market.

    The company said it continues to engage with policy makers for a framework of evidence-based regulations and taxation policies that balance India’s economic imperatives and tobacco control objectives.

  • GPI Leader Honored for CSR Contributions

    GPI Leader Honored for CSR Contributions

    From left to right: India’s vice president, Jagdeep Dhankhar, and Bina Modi, along with the lawyers Jyoti Sagar and Lalit Bhasin (Photo: Business Wire)

    Bina Modi, the chairperson and managing director of Godfrey Phillips India (GPI) has been recognized for her contributions to corporate social responsibility (CSR). The honor was bestowed by the India’s vice president, Jagdeep Dhankhar, during a recent event in New Delhi.

    “I am honored to receive this recognition, which reflects the dedication and hard work of every member of the KK Modi Group family,” said Modi in a statement. “Our ‘people-first’ philosophy, which encompasses all stakeholders of our group companies, remains central to our mission of nation-building and giving back to society. Our CSR initiatives predate their legal mandate in India and are strategically aligned with the global sustainable development goals.”

    Driven by Modi’s vision, GPI’s key CSR initiatives have focused on access to safe drinking water, soil and water conservation, plantation and biodiversity, eliminating child labor, improving community health and empowering marginalized tobacco farmers in southern India. In alignment with the commitment of GPI’s partner, Philip Morris International, to good agricultural practices, GPI aims to enhance livelihoods while preserving the environment. GPI’s CSR initiatives were also given a special mention by Control Union, a globally renowned testing, inspection and certification organization.

    Modi emphasized the symbiotic relationship between environmental sustainability and community welfare. “We’ve taken proactive steps to establish biodiversity parks, safeguarding and revitalizing native flora and fauna,” she said.

    “I am also deeply committed to a bold initiative of large-scale plantation in a semi-arid region of Andhra Pradesh, a state in southern India. We implement check-dams, farm ponds and regular pond de-siltation to promote water conservation in the rain-starved region, enabling farmers to access a secondary water source for cultivating additional crops. By nurturing our environment, we not only preserve natural resources but also create resilient communities capable of thriving in the face of challenges.”

    In addition to her dedication to farmer communities, Modi is passionate about the education and empowerment of young girls and women. Through the Khushi project, she aims to sponsor the education and vocational aspirations of rural girls nationwide.

    Modi’s recent honor follows earlier recognitions such as Women Empowerment in Leadership and Outstanding Businesswoman of the Year.

  • A Perfect Storm

    A Perfect Storm

    Image: StockImageFactory

    How India came to deny consumers legal access to safer ways of consuming nicotine.

    By Samrat Chowdhery

    India’s ban on commercialization of electronic nicotine-delivery systems (ENDS) in 2019 was the blunt political end to a meandering administrative and legal process that began after the World Health Organization Framework Convention on Tobacco Control (FCTC) stated of ENDS in a report presented at its sixth general body meeting held in Moscow in 2014: “while medicinal use of nicotine is a public health option under the treaty, recreational use is not.”

    This early denial of harm reduction principles and mistaking product evolution and substitution for market expansion by the tobacco industry led many developing nations to begin formulating policies to ban e-cigarettes even as they were undergoing rapid development by small-scale Chinese producers—becoming safer, affordable and more effective in helping smokers switch.

    In India, the then Union health minister, Harsh Vardhan, who was well-steeped in the WHO mindset through his earlier work in establishing smoke-free public spaces policies in the 1990s as a state health minister, formed committees soon after the FCTC meeting to evaluate the impact of e-cigarettes. Staffed with experts from the same WHO-linked tobacco control ecosystem, the committees recommended a complete ban. Notably, another panel formed by the commerce ministry to study ENDS favored the regulatory approach but was overlooked.

    In an unexpected twist, the health minister was thereafter reshuffled to another ministry in late 2014, and the issue remained on the backburner until 2019 under the incumbent, although a slow-paced administrative and legal battle continued. The health ministry, through various regulatory bodies, tried to outlaw e-cigarettes, first by claiming they contain nicotine, which requires these products to gain medical approval, and thereafter by stating nicotine is governed by the Poisons Act, which forbids its sale as a consumer product. Both claims were shot down by courts that consistently indicated favor toward the regulatory pathway.

    This deadlock continued until Vardhan was reappointed health minister when his party swept back to power in mid-2019 with an absolute majority. Strengthening his hand was a perfect storm. A major push to ban vaping was being led by tobacco control nonprofits linked to funding from Bloomberg Philanthropies. Among them were The Union, the Campaign for Tobacco-Free Kids (CTFK) and Vital Strategies, which had been lobbying state governments to ban e-cigarettes. With the central government now on board, the wave became a tsunami, and soon, over 15 Indian states had declared a ban on vapor products.

    An underlying economic factor could also be that U.S. e-cigarette maker Juul, which had captured 70 percent of U.S. market share in under two years, announced its entry into India earlier that year, spooking the Indian tobacco industry, which until then had made little effort to develop vapor products, perhaps because the regulatory cloud cast on them since 2014 made long-term investment a risky proposition. Data revealed recently through a Supreme Court directive shows that India’s dominant tobacco company, ITC, donated upward of $11 million to the ruling dispensation a few months before the vape ban. However, it is unclear if this was to influence the ban, to favor or oppose it, or if it was part of election-time funding corporations often provide.

    Nevertheless, the insistence by Juul, which publicly led the pro-vaping side, on relying on foreign experts who did not well understand the complex and opaque Indian tobacco ecosystem; lack of homegrown research and tobacco cessation researchers who could have countered the anti-vaping narrative from the local network developed by Bloomberg-funded nonprofits; as well as the absence of the local tobacco industry from the debate were all contributing factors.

    What followed in rapid succession was to counter the opposition from courts by first banning research into e-cigarettes, followed by a “white paper” by the country’s top government-controlled research body, which cherry-picked research to make a case for a complete ban. This became the basis for an executive order prohibiting the sale of e-cigarettes and heated-tobacco devices, which, breaking from tradition, was announced by the finance minister. Stocks of Indian tobacco companies spiked after the news.

    The bill was debated in Parliament a few months later, where after a lengthy but low-quality debate as many politicians admitted they had not seen these devices and despite allegations of favoring the local tobacco industry and over 60 specific objections to the law, it was passed by brute majority. Vardhan was honored by the WHO with its top award for implementing the e-cigarette ban while The Union and the CTFK congratulated the Indian government along with claiming credit for the legislation. It was win-win for all, those selling tobacco and the ones opposing them, except the over 100 million smokers who had been denied legal access to safer ways of consuming nicotine, as well as the independent e-cigarette vendors, most of whom moved shop to Dubai when a Juul-led court challenge to the ban failed to bring relief.

    The Fallout

    After a year or two of realignment, which saw the vapor market change hands from rule-conscious vendors to black market operators who added e-cigarettes to their portfolio along with smuggled cigarettes (which constitute over a quarter of the market), mobile phones, gold and other prohibited or tax-evaded goods, the full scale of untended consequences some parliamentarians, policymakers and international experts had warned about started becoming apparent.

    The first was a product shift from mod-based devices to much cheaper disposables, which had lower barriers to entry and could be stocked by streetside vendors who have become accustomed to and adept at violating tobacco control laws such as the bar on selling loose cigarette sticks and the ban on gutka and pan masala. It did not take long for these substandard and untested, though affordable, single-use devices from becoming available in small towns across the country, growing the illicit vape market into an industry worth billions as smokers voted for their health by trying to switch while teens had a lot freer and cheaper access to them, the key rationale for the ban. The constituents that suffered were older and women smokers, for whom risk reduction could be most beneficial but who are least likely to engage with the black market. Many of them who had switched went back to smoking.

    A public health opportunity to convert over 100 million smokers and save lives with minimal stress on state resources while earning tax revenue and creating jobs, especially when unemployment rates are soaring, was lost and replaced by increased criminality, lost revenue, heightened risk for adult switchers as these products have not undergone quality checks, and easier access for teens and unintended users.

    The ban led to a short-term windfall for the local cigarette industry with most companies witnessing steady rise in valuations—ITC’s market cap recently overtook BAT’s—especially with the additional sop of the government not raising taxes on cigarettes and other tobacco products for three consecutive years. Yet, despite these remarkable industry concessions for a country hailed as the leader in tobacco control among developing nations, the picture is beginning to look less rosy by the day for local tobacco companies as these switchers are their lost customers who, given the high quit rates for smokers who try vaping, will likely never be back nor will those who are being introduced to recreational nicotine through e-cigarettes as there is little empirical evidence for the gateway theory.

    Failure to preempt shifting consumer behavior and the ensuing black market explosion, that too in a competing future category in which they are now prohibited from participating, could have significant implications for the Indian cigarette industry as no amount of protections and launching sticks in new flavors, which is partly responsible for sustaining cigarette sales, can compete with the users’ desire to safeguard their health and consume nicotine in less harmful ways.

    The Challenges Ahead

    Despite the central government’s ban on e-cigarette research and the media gag on publishing anything pro-vaping, despite the ban on carrying vapes through flights even though their use is not prohibited and despite Bloomberg Philanthropies pumping in a large tranche of funds for anti-vaping efforts, it is hard to miss the rapid transformation taking place in Indian towns and cities as smokers switch en masse to vapor devices.

    An additional pain point for the legacy industry could be the South African experience of the difficulty in shaking off the black market once it takes hold. Even if vaping was legalized in the near term, the legitimate taxed products will find it hard to compete with the cheaper illicit ones, more so when the consumers have been introduced to vaping through the black market.

    The challenge also lies in re-educating the medical fraternity on nicotine—eight of 10 doctors in India believe nicotine causes cancer—such that they understand the role risk reduction can play in reducing tobacco-related mortality and morbidity and sign on to help people struggling to quit toxic forms of nicotine use, or those who do not want to, lower risks by switching to much less harmful alternatives. This will be a tough barrier to cross because high nicotine illiteracy has led to proposals to overturn even the 2014 Moscow statement by restricting access to medical nicotine by making nicotine-replacement therapy (gums and patches) available only through prescription.   

    But it is never too late to course correct, and there appears to be some signaling from the ruling dispensation, which, if opinion polls hold, is set to return to power in the ongoing national elections (the opposition already favors regulation over a ban). The home ministry recently restricted the funding of the CTFK, a significant anti-vaping voice in the country, along with its key local partner while pro-government media is beginning to publish in favor of tobacco harm reduction again. It must not be hard to see the health and economic rationale for ending the ban on safer nicotine alternatives when it is not working anyway.