Use GST to curb illegal cigarette trade, tobacco body says


KOLKATA: Cigarette industry lobby, The Tobacco Institute of India feels the goods and services tax (GST) is an opportunity to address the high tax arbitrage available with cigarette smuggling syndicates and will thereby provide relief to the sector and boost revenue collection from this sector.

Tobacco Institute of India director Syed Mahmood Ahmad said GST presents a unique opportunity to government to address the growing illegal cigarette trade in the country. Cigarettes are among the top five smuggled goods in the country and India is the fourth largest illegal cigarette market in the world.

The lobby cited instances of heightened seizures of smuggled cigaerettes by enforcement agencies in Coimbatore, Noida, Mumbai, Chandigarh, Tuticorin and Delhi. It said while increased vigilance by enforcement agencies has led to interception of illegal consignments of smuggled cigarettes, seizures are only the tip of the iceberg of a much larger and threatening operation in illegal cigarette trade in the country.

Quoting a FICCI Study, the lobby said the ratio of seizures to smuggled cigarettes ranges from a mere 0.3% in 2013 to 1.8% in 2015. According to Euromonitor International, India is the fastest growing illegal cigarette market in the world with 23.9 billion sticks in 2015.

The legal cigarette industry, which constitutes 11% of total tobacco consumption in the country, continues to decline as a consequence of recurrent increase in taxation since 2012-13. During the last five years, the legal cigarette industry has shrunk by 22% from 110 billion sticks in 2011-12 to around 85 billion sticks in 2015-16.