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Ficci, CII appeal to Nadda against 85% tobacco warning rule

12 May 2016

India's top industry bodies the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Confederation of Indian Industries (CII) have written to health minister J P Nadda seeking his intervention to resolve the issue of mandatory warnings covering 85 per cent of tobacco product packets.

The representations come after the Supreme Court on 4 May ordered the tobacco companies to comply with the fresh government notification asking them to cover 85 per cent of every pack with graphic health warnings (See: SC says 85% warning on tobacco packages a must). Tobacco companies are pursuing a legal battle against the order. The CII and Ficci wrote separately to Nadda on 9 and 10 May, respectively.

The government had, in a notification issued on 19 February, asked all tobacco companies, including cigarette, bidis and non-smoking tobacco makers, to cover 85 per cent of the both sides of packets with pictorial health warnings, up from 40 per cent earlier, starting 1 April.

A government notification to the effect was followed by the news that a Parliamentary panel had recommended only a marginal increase in the size - to 50 per cent (House panel seeks reduced size of warnings on tobacco).

The Supreme Court has recently asked cigarette makers to produce packs with 85 per cent pictorial warning till the Karnataka High Court passes its judgement on the fate of the various writ petitions filed by the industry challenging this rule. The apex court has asked the High Court to pass its judgement within eight weeks.

''The committee noted in its report that 85 per cent pictorial warning is too harsh and will result in flooding of illicit cigarettes and gains to unscrupulous elements at the cost of livelihoods of crores of farmers and people employed in the industry,'' Ficci president Harshavardhan Neotia said in his letter to Nadda.

CII and Ficci in their letters to the ministry requested the government to take a balanced view on the issue of graphical warning and take steps to curb illegal trade and production, thereafter address the requisite level of regulation based on the assessment of the prevailing situation.

 "Over regulation in every industry drives trade underground and defeats the purpose. Until we are able to rein in the illegal trade in the sector effectively, it would be desirable to maintain the statu -quo on pictorial warning," CII director general Chandrajit Banerjee wrote in his letter.

 ''While the industry is awaiting the views of the government on the recommendations of the Parliamentary Committee on Subordinate Legislation, in the meantime it has resulted in uncertainty and manufacturers of cigarette, bidi and smokeless tobacco products are unable to continue their production,'' added Neotia.

CII director general Chandrajit Banerjee in his letter to Nadda said, ''Over regulation in every industry drives trade underground and defeats the purpose. Until we are able to rein in the illegal trade in the sector effectively, it would be desirable to maintain the status-quo on pictorial warnings.''

There had been a protest by tobacco growers and small traders in Delhi over the issue after tobacco manufacturers halted production, leading to stockpiles of tobacco with growers.

According to The Economic Times, the Indian legal cigarette industry has been facing a continuous drop in demand because of high taxation and the growth of duty evaded illegal cigarettes that do not carry pictorial warnings. Since 2012-13, the excise duty on cigarettes, at a per unit level, has gone up cumulatively by 118 per cent with increase in taxation in every successive year.

As a result, legal cigarettes today represent only 11 per cent of tobacco consumption in India. As per estimates, the industry is down from 110 billion sticks sold per year to 95 billion sticks a year, even though total tobacco consumption has gone up.

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