[Intl-tobacco] India: Manufacturers worried over proposed tobacco bill (fwd)

[Robert Weissman]

Manufacturers worried over proposed tobacco bill
by Our Corporate Bureau
Source: Financial Express, Thursday, 3/22/01

 Mumbai, March 21: Indian tobacco manufacturers are a worried lot. They
fear that the new Tobacco Bill to be tabled in Parliament this week will
have a dampening effect on the Indian industry while encouraging foreign
brands to occupy limited shelf space at retail outlets. The bill proposes
a blanket ban on all forms of advertising and sponsorship by cigarette
companies.

A source from a leading tobacco manufacturing company said that there will
be a brand switch in favour of foreign brands due to their high visibility
compared to Indian brands after the implementation of the bill. Besides,
the bill will boost contraband foreign cigarette sales since they enjoy a
strong trade push.

Industry sources believe that a blanket ban on advertising will spurt in
smuggling of cigarettes in the country. It is estimated that presently
cigarettes worth Rs 2,000 crore are being smuggled into the country.

The source added that the trade pushes the contraband stocks due to their
higher margin. "Since the smuggled cigarettes come from duty free markets,
the trade margins are as high as Rs 20 for a pack of 20s compared to usual
margins of Rs 8 to Rs 10 for the Indian stocks. In the last one year, the
sale of smuggled brands has risen by about 10 per cent. According to
industry estimates, the share of contraband in the premium brands segment
is as high as 25 per cent.