Illegal cigarettes account for one-fourth of market: Report

Kolkata: Illegal cigarettes now account for one-fourth of the Indian market with such trade growing at a steep rate amid Covid induced disruptions in the country leading to tax evasion value of Rs 400 crore in June to September as per reported seizures in the media, according to a latest report.

The report by tobacco industry body The Tobacco Institute of India (TII), the steep tax increases on cigarettes have provided a boost to illicit trade with ever increasing tax arbitrage. “The reported seizures are only the tip of the iceberg of a much larger operation, as for every seizure dozens of consignments escape any surveillance,” it said.

TII said India is now the fastest growing and fourth largest illicit cigarette market in the world. It said the increased inflow of smuggled cigarettes into the country has led to a sharp spurt in seizures by the Indian enforcement agencies in different parts of the country.

The report quoted Euromonitor International which has estimated that the illegal cigarette market has reached an annual volume of 28 billion sticks in 2019.

TII said the government loses revenue of more than Rs 15,000 crores per annum on account of illegal cigarette trade. It said illegal trade adversely impacts the earnings of tobacco farmers as smuggled cigarettes do not use domestic tobaccos and aids the prevalence of organized criminal syndicates and terror outfits.