ECONOMIC HISTORY OF TOBACCO PRODUCTION

IN INDIA

Professor S K Goyal
Dr Pratap Chandra Biswal
Dr K V K Ranganathan

Institute for Studies in Industrial Development
Narendra Niketan, I P Estate
New Delhi 110002
June 2004

Introduction
India is the world’s second largest producer of tobacco. Endowed with rich
agro-climatic attributes such as fertile soils, rainfall and ample sunshine,
India produces various types of tobacco.

Currently, Indian tobacco is

exported to more than 80 countries spread over all the continents. A few of
the top multinational companies such as British American Tobacco (BAT),
Philip Morris, RJ Reynolds, Seita, Imperials, Reemtsma etc. and many
companies with government monopoly all over the world import Indian
tobacco either directly or indirectly. The Indian market for tobacco products,
however, has some characteristics rather different from most other markets.
India has a large, highly integrated tobacco industry, involving the growing of
a range of leaf types, the manufacture of different tobacco products,
including unprocessed and chewing tobacco, and an extensive distribution
and retail system. Over the years, a combination of strong prices, domestic
consumption, good export demand for tobacco and low prices of other crops
helped the growth of tobacco from a cash crop to a manufacturing industry
linked with commercial considerations.

The tobacco industry in India includes the production, distribution and
consumption of (i) leaf tobacco, (ii) smoking products such as cigarettes and
beedis and (iii) various chewing tobacco products. It presents policy-makers
with an unenviable dilemma. On the one hand, it is a robust and largely
irrigation-independent crop, provides substantial employment, has significant
export potential and most importantly, is a source of ever-growing tax
revenues. On the other, there are public health concerns about the effects of
smoking and consumer-led lobbies asking for more controls on cigarette
sales, smoking and advertising. In spite of its proven adverse implications for
public health, the industry continues to be supported in many quarters on the
grounds of its contribution to employment and national production.

The

organized sector of the industry, dominated by multinational corporations, is
at the forefront of canvassing support for the sector.

2

The worldwide trend in the area of tobacco cultivation and production shows
that while there has been relatively modest growth in the area under tobacco
cultivation, a steady growth in the production area has taken place, pointing
to substantial productivity gains. There has been a shift in tobacco production
from the developed to developing countries. India’s share in the world
tobacco production was 10.2% in 2000, while that of China was 36.7%.
However, in terms of productivity, India has always remained much below
the world average by 20%-40%. An analysis of variety-wise tobacco
production reveals that the bulk of total tobacco production in India consists
of non-cigarette tobacco products as there is a strong, but unorganized,
domestic market for non-cigarette tobacco products. Production of cigarette
tobacco, mainly flue-cured Virginia (FCV), though increasing, still accounts
for only 30% of the total production in the country. This is because of the
200 million tobacco consumers in India; only 13% consume it in the form of
cigarette, while 54% consume it in the form of beedi and the rest in
raw/gutka forms (Indian Institute of Foreign Trade 2002). Worldwide, 85%
of the tobacco cultivated is used in the production of cigarettes. Hence, the
tobacco consumption pattern in India markedly differs from the rest of the
world in terms of product configuration.

Production and Uses of Tobacco in India

Tobacco is an agro-based item produced and consumed both in the
unmanufactured (chewing tobacco and hookah) and manufactured form
(cigarettes, cigars, beedis, snuff, cheroots, gutka, etc.) in India. The Indian
tobacco scenario is characterized by fluctuations in the total area under
tobacco cultivation and levels of production. The total area under cultivation
and production of tobacco in India during 2001–02 were 330,000 hectares
and 380,000 tonnes, respectively. As shown in Table 1, the area under
tobacco production has increased from 360,000 hectares in 1950–51 to
380,000 in 1999–2000 whereas the increase in tobacco production has been
to a larger extent, from 260,000 tonnes to 380,000 tonnes over the same
period. Specifically, the trend of increase in production is more visible after
the 1980s, reflecting the increase in productivity as shown in Fig. 1. The
fluctuations in the area under tobacco cultivation during the past five decades
are sharp but do not show an increasing trend in acreage under crop. Also,
production has increased over the years.

3

Agricultural Statistics Division. Ministry of Agriculture. 2003 Fig. India. Directorate of Economics and Statistics. 1 Area under cultivation and production of tobacco in India 800 Area under cultivation Production 600 500 400 300 200 2000–01 1996-97 1998–99 1994-95 1992-93 1990-91 1988-89 1986-87 1984-85 1982-83 1980-81 1978-79 1976-77 1974-75 1972-73 1970-71 1968-69 1966-67 1964-65 1962-63 1960-61 1958-59 1956-57 1954-55 1952-53 100 1950-51 Area under cultivation and production of tobacco 700 Year 4 . Area under cultivation and production of tobacco in India Year Area (x 1000 hectares) Production (x 1000 tonnes) 1950–51 360 260 1951–52 290 1952–53 360 1953–54 Year Area (x 1000 hectares) Production (x 1000 tonnes) 1976–77 430 420 210 1977–78 500 490 250 1978–79 410 450 370 270 1979–80 430 440 1954–55 350 260 1980–81 450 480 1955–56 410 300 1981–82 440 520 1956–57 420 310 1982–83 500 580 1957–58 360 240 1983–84 440 490 1958–59 380 320 1984–85 440 490 1959–60 410 290 1985–86 400 440 1960–61 400 310 1986–87 390 460 1961–62 420 340 1987–88 320 370 1962–63 410 340 1988–89 380 490 1963–64 440 360 1989–90 410 550 1964–65 410 360 1990–91 410 560 1965–66 380 290 1991–92 430 580 1966–67 420 350 1992–93 420 600 1967–68 420 370 1993–94 380 560 1968–69 440 360 1994–95 380 570 1969–70 440 340 1995–96 390 540 1970–71 450 360 1996–97 430 620 1971–72 460 420 1997–98 460 640 1972–73 450 370 1998–99 510 740 1973–74 460 460 1999–00 430 520 1974–75 380 360 2000–01 260 340 1975–76 370 350 2001–02 330 380 Source: “Agricultural Statistics at a Glance – 2003”.Table 1.

7 535.6 149.3 2. Table 2.4 23.0 17.0 7.3 7.8 381.2 30.2 29.6 6.4 190.1 8.8 2.3 35.8 3. Variety-wise area under cultivation and production of tobacco in India Virginia (Area: x 1000 hectares) (Prodn: million kg) 1994 1995– 1996 –95 96 –97 120.6% of the total area under tobacco cultivation and 29. India is the only country where the bulk of production consists of numerous non-smoking types of tobacco.20 617.1% of the area under tobacco cultivation and accounted for 23.0 33.9 22.0 35.1 137.3 1.8 9. chewing and snuff tobacco necessitates the cultivation of non-cigarette types of tobacco to a relatively large extent.3 13.4 18.1 45.8 159.00 7.0 13.0 44.6 Chewing tobacco Area 48.6 15.1 Beedi Area 118.0 463.60 428.1 1.0 9.5 1. the share of chewing tobacco in India’s tobacco production has risen steadily over the years from 11.0 48.4 9.6 130.3 16.0 10.00 9.6 12.5 62.9 1997 –98 39.9 646.6 1994 –95 31. India.9 3.7 138.7 9.4 21.9 138.5 29.4 38. hookah.4 394.4 117.2 218.1 Prodn 123.1 7.6 38.8 34.9 566.5 139.5% of total production whereas Virginia tobacco used in cigarettes was grown on 39.5 10.0 21.6 12.9 1.2 50.7 11.7 5.7 Prodn 65.8 1996 –97 34.7 138. However.8 6.2 3.5 9.5 100 100 100 100 100 Prodn 562.4 22.7 1995 –96 31.2 211.1% in 1997–98. Prodn: production 5 .2 30.6 Prodn 188.9 42.8 1.3 65.3 63.0 11.5 11.6 38. An analysis of variety-wise production of tobacco (Table 2) shows that during 1997–98.9 17.8 11.9 20.8 3.4 40.9 9.3 3.1 3.9 3.8 3.2 13.7 24.8 29.7 2.6 12.3 21.2 2. Ministry of Agriculture.8 2.18 5.3 15.2 Share in total area and prodn Area 1993 –94 133. The presence of a strong domestic demand for beedi.5 29.9 7.6 188.6 1.2 1997 –98 181.6 Natu Area 60.1 2.9 8.9 Prodn Cigar and Cheroot Hookah Area Prodn Area Prodn 97.8 205.4 64.9 17.8 113.6 11.6 17.0 1993 –94 34.1 3.6 3.1 1.9 14.6 16.6% of the total production.1 16.3 34.3 118.4 16.2 152.5 Area 384.0 100 100 100 100 100 Prodn Total Source: Directorate of Tobacco Development.1 2.2 25.1 32.1 Snuff Area 1. beedis accounted for 29.7 33.0 52.A special feature of the domestic tobacco production scene in India is the varietal composition of the produce.0 8.7% per cent in 1993–94 to 29.9 3.8 125.7 7.

Flue-cured Virginia tobacco. Gujarat. Tobacco used for chewing and hookah are grown in other tobacco-producing states of India. The share of unmanufactured tobacco production in India is 10. cigars and beedis.Unmanufactured Tobacco Unmanufactured tobacco is either exported. The major tobacco producing states in India are Andhra Pradesh (AP). During 2002–03. used in the manufacture of cigarettes.5% of the total world production. Usually.000 tonnes and the forecasted production for the year 2003 was 595. During the late 1980s and early 1990s.024. Uttar Pradesh (UP) and West Bengal. Andhra Pradesh. (iv) dark air/sun-cured. Gujarat. Flue-cured Virginia tobacco is the primary ingredient in the manufacture of cigarettes. Tamil Nadu. ranking second only after China (Table 4).000 tonnes in 2003–04. there are seven broad types of unmanufactured tobacco based on the end-use and curing methods such as: (i) FCV. is primarily cultivated in AP and Karnataka. (vi) dark air-cured (cigar) and (vii) dark fire-cured. directly consumed as chewing tobacco. (ii) Burley. There has been an increasing trend of unmanufactured tobacco production over the years as shown in Fig. there were sharp increases in production. Maharastra. (v) light air-cured.2% of the total world production. and Karnataka. 6 . Orissa. or used as input in the production of manufactured items such as cigarettes. world production of unmanufactured tobacco was 6. (iii) Oriental. China is the largest producer with 39.000 tonnes and which is forecasted to increase to 595. Burley and Oriental types are blended with FCV in appropriate proportions to create specific qualities of tobacco for cigarettes to cater to the taste of smokers. Karnataka and UP together account for over 90% of the total tobacco production in the country.000 tonnes of which India produced 592. whereas beedi tobacco is grown in Gujarat. Other states where tobacco is grown include Bihar. Recently. 2. India has become one of the largest producers of unmanufactured tobacco. The total production of unmanufactured tobacco in India in 2001 was 530.000 tonnes (Table 3).

600 2000 5.000 .61.200 1980 4. Foreign Agricultural Service.600 1983 5.99.800 1996 5.66.900 1989 4.000 600.95.400 1976 3. f: forecast Fig.51.200 2003 (f) 5.37.Table 3.800 1998 5.92.200 1990 5.55.500 1977 4.000 1986 4. 2. Official United States Department of Agriculture (USDA) Estimates for February 2004 p: preliminary.000 1985 4.99.400 1972 4.30.500 1997 5.000 1970 Unmanufactured tobacco production 550.72.18.100 1987 4.100 1999 5.20.000 Year 7 .92.900 1975 3.35.000 2003 (f) 2001 2002 (p) 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 300.900 1978 4.87.800 1973 3. 450.18.53.81.900 1988 3.800 1993 5. Production of unmanufactured tobacco in India since 1970 Year Total production (tonnes) Year Total production (tonnes) 1970 3.38.63.100 1981 4.500 2001 5.700 1979 4.200 1982 5.000 Source: Tobacco Board of India.100 1991 5.400 1984 4.84.100 1992 5.96.000 350.61.000 400.62.85.41.67.92.600 1995 5.72. Unmanufactured tobacco production in India 650.80.62.93.000 500.900 2002 (p) 5.800 1971 3.600 1974 4.49.800 1994 5.

15.42.72.9 9.5 3.4 1.481 32.150 4.000 97.350 1.4 United States 6.100 4.2 20.9 Argentina 98.10.262 17.550 Greece 127000 China Italy 2000– 2001 2001– 2002 Share in world production (%) 1998– 1999 1999– 2000 2000– 2001 2001– 2002 2002– 2003 (p) 2003– 2004 (f) 35.26.577 62.9 7.9 2.83.9 5.837 75.95.241 9.11.4 1.016 29. Official United States Department of Agriculture (USDA) Estimates for February 2004 p: preliminary.5 2.2 8.256 94.689 56.44.92.06.183 23.51.435 1.98.000 2.22.636 94.1 1.9 2.720 4.0 1.000 1.28.3 1.533 58.04.9 2.9 34.21.570 2.4 1.07.5 Others 18.57.9 1.3 39.363 3.99.200 5.99.666 17.24.4 9.87.27.98.08.000 5.301 1.094 11.8 1.5 1.4 9.600 5.400 5.8 10.5 2.052 Malawi 95.8 1.35.4 1.2 9.766 84.7 1.190 3.30.10.460 1.131 5.04.78.039 1.9 5.0 28.3 2.477 60.200 4.33.58.97.4 89.550 1.72.830 2.400 91.000 1.7 7.15.72.580 1.400 4.000 5.1 27.567 100 100 100 100 100 100 Source: Foreign Agricultural Service.250 Turkey 2.10.100 1.17.12.993 13.3 27.5 1.12.87.9 2.6 1.5 5.5 9.700 81.720 5.Table 4.8 1.225 1.000 19.700 1.93.420 63.4 1.4 6.000 Brazil 3.42.9 7.2 2.7 Pakistan 84.147 1.2 1.653 1.34.4 6. f: forecast 8 .35.988 22.4 2.73.812 1.700 1.0 1.559 3.06.33.389 1.446 1.23.721 86.3 3.000 1.0 2.9 World total 62.65.300 1.18.9 2.0 9.2 9.905 22.902 16.24.5 1.997 1. World unmanufactured tobacco production (tonnes) Production (tonnes) 1998– 1999 1999– 2000 2002– 2003 (p) 2003– 2004 (f) 20.95.911 1.027 Indonesia 1.2 33.100 91.250 1.23.20.46.1 1.250 20.0 39.5 1.1 2.1 2.08.4 1.996 89.345 5.8 1.7 India 5.07.39.168 1.7 22.24.11.5 1.73.

cheroots and cigarette tobacco was 33% per cent in 1997–98. smoking tobacco usage has shifted from traditional products such as hand-rolled cigarettes. According to the data provided by the Indian Tobacco Board and Reserve Bank of India (RBI). The overall trend of total manufactured tobacco production showed a steady increase from Rs 4. The production of different varieties of tobacco is directly related to the pattern of consumption.000 sticks in 1997–98 to 93. and in some varieties of chewing tobaccos. 80% of sales and market share. Vazir Sultan Tobacco (VST) Industries Limited and Golden Tobacco Company (GTC) Limited (Table 6). the cigarette industry is facing a declining trend and increasing activity from antismoking lobbies. In India also production of cigarettes has declined from 98. beedis. there has been an overall shift in manufactured tobacco production towards smoking use in India. however. Beedis alone account for 31% of all manufactured tobacco production while the share of cigarettes.9%.5%-1. pipes and hookah to cigarettes (both filter and non-filter). the Indian trend is similar to the worldwide trend of more smoking tobacco products. However. In this respect. Although the share of domestic cigarette production.405 crore sticks in 1982–83.237. Godfrey Phillips India (GPI) Limited. The pattern of production within smoking products. it has remained stable within the range of 1. 9 . increased marginally over the years. presents a sharp contrast to the worldwide trend. There are four major manufactures of cigarettes in India – the Indian Tobacco Company (ITC) Limited. In the 1990s. production again started increasing till 1999–2000. cigars. the production of cigarettes reached a peak of 9. Internationally.6 in 1997–98.Manufactured Tobacco Manufactured tobacco products are typically used for smoking such as cigarettes and beedis. declining subsequently thereafter (Table 8). Beedi production is the dominant form of tobacco produce in Indian manufacturing units.000 sticks in 2002–03 according to the US Department of Agriculture (USDA) estimates (Table 7). The worldover.7 million in 1973–74 to Rs 80. Out of these four. cigars. As shown in Table 5. and showed a downward movement for the next 2 years till 2002.319. the production of chewing tobaccos such as pan masala and catechu is increasing over the years. ITC Limited alone account for more than 60% of total production. cheroots.

3 21.6 18.4 714.529.4 9.9 19.6 31.8 10.3 2519.3 14.5 23.8 100 1984–85 3290.8 8. Central Statistical Organization.8 4.5 100 1995–96 9.280.6 6.0 17.1 18.6 19.3 10.0 100 1981–82 3218.6 18.9 2758.5 15.2 12.2 44.689.2 10.7 24.2 27.6 665.4 36.187.869.1 5257. 229: manufacture of pan masala.0 26.0 506.7 3398.4 11.7 21.3 7858.115.2 13.4 13.1 4420.939.8 1733.442.3 16.0 100 1991–92 8380.1 12.1 100 1977–78 2481.8 46.3 14.6 21.8 1150.6 40.2 6.2 21.8 39.9 100 1987–88 2641.3 1149.3 4764.1 23.4 27.6 7.4 1504.0 2994. cigarettes.3 43.499.7 15.1 25.5 9.2 5162.2 4198. 1997–98.1 5493.6 8468.3 4237.6 4033.5 6.6 29.6 44.7 100 1982–83 3187.8 2703.3 5.5 38.6 47.7 32.904.1 100 1976–77 1952.6 100 1996–97 13.9 2166.7 25.8 1055.945.5 9.6 100 1988–89 2824.4 444.4 100 1978–79 2565.6 25.0 3614.8 100 1994–95 10.5 4403.3 100 1989–90 4350.2860 18.5 24.9 2824.919.826.7 2170.3 11.8 37.9 4503.3 20.1 1443.5 100 Source: Annual Survey of Industries.0 2704.3 2085.1 28.813.2 19.5 42.1 7793.1 738.6 100 1993–94 11.4 7.4 1417.919.0 12.8 32.219.158.1 4634.6 34.3 6.7 71.4 6.6 38.8 2468.9 53.9 14.832.2 1821.3 23.3 8605.6 8.0 33.8 21.9 2336.4 7714.696.4 100 1986–87 3057. 227: manufacture of cigars.4 39.933.8 6.0 9608.1 19.4 30.9 9.3 3225.2 11.266. 228: manufacture of snuff.777.2 5036.9 335. catechu and chewing lime.3 100 1983–84 3818.1 31.8 100 1974–75 1557.2 7.319.7 47.4 8159.6 3884.8 2055.4 1989.3 28.2 100 100 1992–93 9340.3 6181.9 27.5 6648.9 36.9 32.8 39.2 55.7 453.7 13.6 4275.111.3 6720.4 1707.503.0 27.6 6919.2 42.2 31.5 3124.8 30.4 3027.7 100 1979–80 2234.2 22.5 53. chewing tobacco and other tobacco products.4 2825.2 31.6 100 1997–98 11.614.2 33.6 26.7 35.2 12.4 10.0 100 1985–86 3303.951.5 36.7 11.8 26.609.3 8344. New Delhi 225: tobacco stemming. redrying and other operations.3 1394.4 3481.8 30.4 9077.0 41.888.4 27.6 100 1980–81 2445.9 31.2 24.0 27.742. 10 .3 440.5 11.681.2 35.8 6.8 10.1 4289.3 1317.5 9874.7 38.7 8428.6 11.3 22.5 701.4 2425.8 2723.8 10.5 1445.4 7.1 9472.4 35.6 17.279. 226: manufacture of Beedis.9 15.6 14.5 10.9 13.3 770.9 80.2 31.2 14.0 7207.7 7.112.0 24. Value of the gross output of the manufactured tobacco sector (Values in Rs million) Year Sector 225 Sector 226 Sector 227 Sector 228 Share (%) Sector 229 Total Sector 225 Sector 226 Sector 227 Sector 228 Sector 229 Total 1973–74 1509.4 556.1 24. cheroots and cigarette tobacco.6 5184.863.4 34.0 100 1975–76 1765.422.2 27.2 6.4 19.Table 5. zarda.1 1990–91 51171 15.7 32.

3 12.4 76.0 72.67 4328.8 49.4 8.1 12.98 G T C Industries 155. 2004.86 9026.51 Total 3573.9 Sales (Rs in crores) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2230.88 6536.4 7.53 698.8 4.5 4.16 358. July 1998 and August 2003.28 363.4 49.03 9916.5 4.46 Total of major 4 companies 3565.5 80.5 68.10 595.86 919.0 75.3 6.95 803.4 75.8 4.72 649.80 128.51 4833.58 Godfrey Phillips India 670.63 8013.82 7661.6 Market share (%) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 ITC 62.94 9776.06 6939.19 5697.6 G T C Industries Source: Centre for Monitoring Indian Economy (CMIE) Prowess (Release 2) database.49 656.90 2981.70 557.8 15.13 5678.1 3. Production.3 49.1 9.8 78.7 76.6 Godfrey Phillips India 18.87 7644.35 9938.9 69.71 925.14 ITC Share of ITC Ltd in total (%) 62.91 585.1 11.6 76.3 4.4 66.21 322.Table 6.67 597. sales and market share of major manufactures of cigarettes in India Company Production (millions) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 I T C Ltd 32953 33278 34550 37653 42251 46094 51445 52127 56365 55879 53551 Godfrey Phillips India Ltd 15802 13096 11769 12646 12332 12896 13260 12592 11975 9183 8857 V S T Industries Ltd 14900 14171 12710 13469 15143 13545 14113 12716 11958 11519 8990 G T C Industries Ltd 1866 2219 2374 2942 -NA- 8344 10955 7320 7290 5822 7214 Total of major 4 companies 65521 62764 61403 66710 69726 80879 89773 84755 87588 82403 78612 Total 70563 67514 69356 76165 84881 83078 92135 90669 97839 91023 88000 Share of ITC Ltd in total (%) 46.5 11.97 4141.45 3335.20 9002.70 2752.58 977.4 12.98 4927.5 57.6 61. NA: Not available 11 .80 999.4 9.4 76.03 9752. "Industry market size and shares".87 7676.8 55.9 72.1 7.21 250.4 3.87 6517.72 4105.5 80.07 5777.74 445.0 VST Industries 14.6 14.52 894.69 8521.3 7.17 183.2 14.7 12.9 78.4 3.90 4123.4 60.2 8.6 3.4 66.4 3.8 68.1 75.3 10.5 68.82 4815.88 619.2 4.7 49. and CMIE.2 75.30 630.9 12.95 6535.92 726.8 57.59 660.8 14.39 250.18 147.08 4316.91 8510.75 401.49 VST Industries 508.17 632.5 55.73 536.56 710.

750 92.000 127.1 2.368 56.830 134.1 4.724 221.9 3.292 126.01.9 1.014 130.0 1.400 104.3 3.547 155.7 1. f: forecast 12 .1 2.425 126.1 2.04.8 3.000 1.98.8 1.1 3.154 257.5 Germany 181.000 341.2 Indonesia 216.94.435 106.770 213.9 39.148 2214.000 4.500 93.8 1.000 3.3 2.9 1.200 225.026 22.35.000 2.965 256.2 30.000 97.141 133.5 Brazil 170.571 21.293 200.3 30.586 97.6 6.000 3.9 India 98.95.147 56.5 34.800 128.3 2.500 211.477 16.000 380.0 1.2 30.6 1.071 120. Official United States Department of Agriculture (USDA) Estimates for February 2004.300 90.Table 7.2 World total 55.135 98.208 56.904 204.1 39.000 224.8 1.700 93.5 4.9 39.8 4.8 6.8 Others 22.3 2.000 86.3 2.650 16.82.000 1.5 180.500 2.6 Japan 267.09.000 374.000 375.5 1.000 111.2 2.9 4.050 263.2 2.911 50.2 3.6 4.1 39.020 125.500 2.549 16.000 3.1 4.000 97.74.983 123.000 30.649 100 100 100 100 100 100 Korea Source: Foreign Agricultural Service.500 266.105 126.798 21.09.580 3. World cigarette production (1000 sticks) Total production 1997– 1998 China Russia 1998– 1999 1999– 2000 2000– 2001 Share in world production (%) 2001– 2002(p) 2002– 2003(f) 1997– 1998 1998– 1999 1999– 2000 2000– 2001 2001– 2002(p) 2002– 2003(f) 16.767 5554.8 1.39.2 4.9 1.3 2.7 Turkey 118.35.1 6.350 130.793 212.2 30.03.9 2.1 3.000 126.6 3.500 17.6 Netherlands 116. p: preliminary.7 1.900 109.7 7.358 186.1 2.80.2 32.7 4.2 2.4 2.22.9 2.685 101.83.505 17.7 UK 163.3 2.263 119.417 232.7 1.8 4.831 206.286 97.000 17.200 229.01.069 40.8 2.

Tobacco usage in India is contrary to world trends since beedi and chewing tobacco are the dominant forms of tobacco consumption whereas internationally. it is still ahead of other forms of tobacco consumption in India.Table 8. consumption of tobacco in all forms has reduced. The consumption of beedis is declining to a larger extent than that of other tobacco products. The use of tobacco and its various products appears to have declined in Indian rural and urban populations over the period from 1987–88 to 1999–2000.130 tonnes in 2003–04 (Table 9). 13 . Official United States Department of Agriculture (USDA) Estimates for February 2004 p: preliminary. cigarette is the dominant form of tobacco use. ranking third in total tobacco consumption behind only the markets of China and the United States.8 kg (Indian Institute of Foreign Trade 2002). f: forecast Consumption India is one of the biggest tobacco markets in the world. Again this trend of decline in consumption trend is faster among the urban population. Domestic unmanufactured tobacco consumption has increased from 483. per capita consumption in the country is 0.9 kg compared to the world average of 1. Production of cigarettes in India Year Production (crore pieces) Year Production (crore pieces) 1970–71 6293 1986–87 7191 1971–72 6578 1987–88 6184 1972–73 6208 1988–89 5453 1973–74 6414 1989–90 5928 1974–75 6049 1990–91 6185 1975–76 5928 1991–92 6513 1976–77 6720 1992–93 6141 1977–78 6799 1993–94 7184 1978–79 7091 1994–95 7104 1979–80 7857 1995–96 6959 1980–81 7738 1996–97 7384 1981–82 9100 1997–98 8316 1982–83 9405 1998–99 7931 1983–84 8782 1999–00 8250 1984–85 8650 2000–01 6112 1985–86 7700 2001–02 6058 Source: Foreign Agricultural Service.360 tonnes in 1998–99 to 488. According to the National Sample Survey (NSS) data shown in Table 10. However. Though the consumption of chewing tobacco declined over the years.

72.750 1.566 2236808 16.8 2.620 94.72.8 8.20.81.9 Turkey 1.5 70.7 UK 1.701 1.5 2.66.2 23.4 1.2 1.6 3.491 1.651 1.1 8.000 2.125 1.3 2.437 1.63.3 Indonesia 1.9 7.6 6.93.5 1.4 33.72.1 1.1 31.765 65.83.97.5 Germany 1.012 71.510 3.01.00.00.55.09.2 2.120 96.75.0 6.01.537 86.000 1.16.909 4.8 74.9 6.62.690 96.250 84.700 1.63.7 1.36.08.7 4.574 35.3 India 4.9 25.000 2.41.78 1.750 1.5 1. Official United States Department of Agriculture (USDA) Estimates for February 2004 P: preliminary.9 2.5 2.83.7 2.65.525 1.925 1.0 2. f: forecast 14 .74.460 2.55.5 Russia 1.00.190 8.08.4 1.130 4.3 37.12.42.809 100 100 100 100 100 100 Philippines Others World Total Source: Foreign Agricultural Service.030 1.8 Brazil 1.909 4.320 1.4 3.77.2 2.7 1.540 1.700 3.471 26.900 1.140 1.9 21.545 12.80.10.06.23.4 2.2 1.733 70.07.5 Japan 1.7 7.21 34.6 1.3 42.08.360 4.000 1.36.9 1.49.10.947 4.700 1.00. World unmanufactured tobacco consumption (tonnes) Total domestic consumption 1997/ 1998 1998/ 1999 1999/ 2000 2000/ 2001 Share in world consumption 2001/ 2002(p) 2002/ 2003(f) 1997/ 1998 1998/ 1999 1999/ 2000 2000/ 2001 2001/ 2002(p) 2002/ 2003(f) China 23.2 6.7 1.304 1.89.5 USA 6.2 7.49.5 1.100 2.22.52.350 4.70.790 66.0 2.2 1.78.7 8.0 44.300 2.72.71.791 1.64.350 27.870 1.03.480 3.Table 9.065 23.000 1.835 5.700 4.300 1.275 4.4 1.000 1.27.05.1 41.16.42.759 24.700 2.8 1.750 1.000 1.88.01.100 1.904 28.7 5.606 15.6 2.035 1.33.84.554 33.2 4.19.130 6.4 4.4 2.9 1.190 4.585 1.98.100 1.5 1.14.029 58.112 1.9 2.80.70.53.700 1.40.44.20.7 1.850 1.732 24.35.5 24.630 1.14.

56 55 Urban Total Source: Consumption of some important commodities in India: 1999–2000.76 22.2 4. On the other hand.93 1. 15 .1 6.) Value (Rs) Rural 43rd 1987–88 0.9% in 1997–98 to 7.5 2.21 49. pan and other intoxicants maintained their share in total private expenditure at around 0.1 0. Ministry of Statistics and Programme Implementation.6 0.820 million sticks and it decreased to 91. as given by the Centers for Disease Control and Prevention.45 th 1999–00 0.0 1. National Sample Survey (NSS) 55th Round.514 million sticks in 1997.74 50th 1993–94 2.16 32.9 0. At the same time.3 8.908 million sticks in 1970 to 81. The domestic share in world consumption though remained almost the same from 1997–98 to 2002–03. Central Statistical Organization (CSO) statistics show that there is almost no significant decline in the consumption of tobacco and its products with respect to the total private consumption expenditure.4 0. India’s position came down to tenth in 2002–03 from seventh in 1997–98.45 55th 1999–00 1. the share of domestic consumption of unmanufactured tobacco went up from 6.2 4.55 78.7 1.7 0.4 1.) Value (Rs) Beedi (no.1 3. However.2 3. There has been an increase in total cigarette consumption from 62. As shown in Table 11.27 50th 1993–94 0.8 0.2 3.49 4.88 43rd 1987–88 1.) Quantity (no.5% in 2002–03 (Table 9).70 38.54 60. the per capita consumption of cigarettes decreased from 190 sticks in 1970 to 129 sticks in 1997 as shown in Table 12.5 over the period from 1991–92 to 2001–02.68 43rd 1987–88 2.78 38.90 55th 1999–00 2.) Quantity (no. the total number of cigarettes consumed was 96.91 88.160 million units in the year 2002–03 (Table 13). Monthly per capita quantity and value of consumption per 30 days NSS Round Year Pan: finished Quantity (no. New Delhi. in 1997–98.70 0. USA. compared to cigarettes. India’s position has increased from the third to the second largest unmanufactured tobacco-consuming country in the world.12 3.7 2. Again.7 0.03 4. Also.5% of world consumption. the forecasted figure shows that it would increase to 7.8 0. More recently. tobacco and its products showed a highly fluctuating declining trend during the period from 1991–92 to 2001–02. more of unmanufactured forms of tobaccos are consumed in India.91 0.7 3.47 th 50 1993–94 1. Over the years.Table 10.9 1.2 1. In a different analysis.) Value (Rs) Cigarettes (no.4 2.79 3.53 5.39 45.9 1.0 2.5 1.60 4.

5 2.440 0.734 179 1971 64.285 0.700 5.18.5 2.665 20.5 1.5 2.923 6.175 6.187 16.780 19.987 127 1974 60.938 0.197 178 1994 69.191 145 1973 63.38.3 1992–93 2. Government of India.52.141 205 1996 71.686 113 1978 70.494 179 1987 63. Central Statistical Organization.609 188 1993 68.9 1998–99 3.5 2.97.Table 11.980 0. Cigarette consumption in India Year Cigarette consumption (million sticks) Per capita consumption (sticks) Year Cigarette consumption (million sticks) Per capita consumption (sticks) 1970 62.5 2.908 190 1984 83.703 12.1 1994–95 3.36.711 118 1981 84.024 103 1975 58.66.662 12.982 103 1979 77.2 1996–97 3.5 1.481 0.210 173 1990 54.566 0. Website accessed on 22nd July.391 190 1985 77.772 0.5 2.840 14.74. USA (www.6 1999–00 3.309 5.492 8.032 176 1986 71.376 183 1997 81.598 175 1992 57.cdc.867 101 1977 67.096 5.672 162 1972 61.8 1995–96 3.054 16. 2003 Table 12.537 6.gov).07.0 2001–02 4.004 12.238 7. 2004 16 .514 129 Source: Centers for Disease Control and Prevention.308 171 1991 62.7 1993–94 3.01. Consumption of tobacco and its products in India Year (Rs in crore) Share in total private expenditure (%) Pan and other Tobacco and intoxicants its products Pan and other intoxicants Tobacco and its products Total private final consumption expenditure 1991–92 2.624 8.911 0.828 0.50.262 194 1995 68.8 Source: National Accounts Statistics.294 116 1983 83.7 1997–98 3.202 15.165 156 1989 57.5 1.465 119 1980 75.636 0.5 2000–01 4.410 11.89.243 14.266 165 1988 53.956 7.653 0.716 7.540 114 1982 91.5 2.069 108 1976 66.5 2.

058 21.6 5.000 105.000 2.7 1.128 49.66.7 2.000 71.047 16.800 105.072 199.557 55.8 Russia 245.190 84.513 143.9 7.8 Indonesia 199.8 30.500 6.778 16.3 6.9 6.71.87.1 2.5 39.8 30.65.44.4 1.88.958 171.460 21.100 1.008 54.1 2.4 6.97.200 2.000 288. World cigarette consumption (1000 sticks) Domestic consumption 1997– 1998 China 1998– 1999 1999– 2000 2000– 2001 Share in world consumption (%) 2001– 2002(p) 2002– 2003(f) 1997– 1998 1998– 1999 1999– 2000 2000– 2001 2001– 2002( p) 2002– 2003(f) 16.7 1.6 2.913 85.20.92.357 106.598 93.48.6 39.751 21.950 115.5 1.2 5.046 286.9 Turkey 109.279 181.7 1.868 53.942 91.49.4 Italy 93.88.6 3.6 2.88.8 40.244 327.400 109.591 40.9 5.820 95.160 1.9 2.620 72.972 16.600 377.6 1.8 Others 21.78.000 378.900 3.482 326.7 1.900 89.9 1.75.9 3.000 87.4 5.000 4.5 Germany 140.300 115.500 105.100 3.6 6.8 1.455 91.55.8 1.29.8 1.647 102.000 2.7 1.5 39.9 India 96.109 94.7 3.2 2.22.Table 13.665 81.6 1.6 33.164 142.500 116.309 94.0 Spain 89.6 Japan 336.865 150.8 1.100 104.20.83.8 Philippines 75.9 5.536 95.2 Brazil 97.291 17.7 2.8 1.500 100.4 World total 53.6 31.349 31.3 1.4 3.500 115.975 95.3 34.200 1.3 30.7 2. f: forecast 17 .108 54.600 332.548 16.500 1.322 100.630 145.1 2.300 1.9 1.8 1.7 1.950 16.1 2.300 359.390 89.3 1.9 3.9 1.535 115.539 217.8 1.554 148.800 100 100 100 100 100 100 Source: Foreign Agricultural Service.9 2.9 1.136 208. Official USDA Estimates for February 2004 p: preliminary.899 21.

2 crores in the beginning of the 1950s to Rs 883.5 92.97 1960–61 96.4 million kg in 2003–04.3 5. India’s export earnings has gone up by over 58 times from Rs 15.4 13. India’s exports of tobacco and tobacco products in volume terms spurted from 44.44 4.61 (Contd… 18 .29 1977–78 95.6 3.03 22.20 1955–56 96.48 24. Even after 90 years of the existence of a domestic cigarette manufacturing industry.06 1980–81 86.6 million kg in 1950– 51 to 115.2 11.4 92.5 85. As early as in 1950–51.82 3.8 89.1 3.18 1965–66 95.4 96.0 94.6 7.8 13.6 85.56 4.04 1984–85 77. Share of export performance of India since 1950–51 (in percentage) Year Unmanufactured Tobacco Quantity Value Manufactured Tobacco Quantity Value 1950–51 94.8 2.4 crores in 2003–04 (Table 15).47 13.8 4.08 1982–83 82. From the data on tobacco exports.4 14.81 1979–80 92.90 1986–87 75.Exports India is one of the major exporters of unmanufactured tobacco.9 96.19 6.36 1976–77 93.2 21.97 1985–86 76.7 16.7 94. Nevertheless.53 1981–82 86.2 86.47 1970–71 95.26 1975–76 94.5 14.53 4.50 1983–84 84.3 5.4 18.64 5.10 23.2 97. which was 84.80 5.56 1974–75 96. Table 14.6 86.2 95.44 1978–79 93.39 21.2 78. 95% of the volume of tobacco exports consisted of unmanufactured tobacco alone.03 3.92 13.52 1987–88 78.50 17.2 90.3 83. India’s tobacco exports still continue to be dominated by unmanufactured leaf.94 7.8 9.7 94. due to the general increase in tobacco prices at the world level.01 15.74 3.9 5. but has yet to make its presence felt in the export market for cigarettes.6 7.71 6.6 11.6% of the volume in 2003–04 (Table 14).4 88.6 81. it is evident that India is known more for its unmanufactured tobacco than for the value-added manufactured products of tobacco.

7 1.41 1984–85 74.6 67.8 32.8 85.44 122.5 98.85 12.1 74.59 9.4 70.24 1978–79 78.3 116.53 5.69 14.81 1989–90 78.3 1988–89 39.2 13.9 1.95 13.3 70.33 1998–99 81.8 342.9 12.50 21.8 85.4 16.8 184.9 181.39 1995–96 85.0 11.58 2.72 10.71 86.5 15.3 80.83 1960–61 45.53 132.76 10.58 59.2 79.87 21.1 11.6 22.7 263.3 25.16 49.Year Unmanufactured Tobacco Quantity Value Manufactured Tobacco Quantity Value 1988–89 79.18 41.86 15.6 13.3 19.14 50.7 21.14 Source: Tobacco Board.6 91.16 1970–71 47.9 82.8 30.59 1987–88 48.62 5.00 9.32 61.9 88.0 406.32 15.4 5.22 1975–76 74.74 1993–94 92.8 157.8 144.02 1977–78 89.3 16.71 5.6 29.39 1982–83 100.27 78.86 1989–90 58.03 1990–91 70.4 73.33 94.2 117.66 1985–86 64.40 2.2 5.9 83.7 507.1 96.0 17.8 4.9 82.05 16.41 1994–95 80. 2004 Table 15.3 233.85 15.21 3.3 67.1 172.61 1.59 84.03 93.8 32.83 14.03 20.0 87.1 14.3 21.9 108.5 19.66 2000–01 87.6 15.16 44.4 113.3 1979–80 64.44 1993–94 90.3 434.5 79.2 22.4 2.4 93.32 15.7 32.3 54.5 390.12 1981–82 114.53 83.7 27.62 84.5 185.7 172.3 10.9 20.13 47.86 17.31 10.87 21.7 47.7 1983–84 89.10 4.8 14.3 116.74 1965–66 56.16 13.9 88.72 88.4 214.30 1999–00 89.7 5.6 5.56 1974–75 74.98 19.26 21.7 209.50 1990–91 84.78 16.79 96.4 1992–93 81.24 15.61 19.27 90.2 247.6 1.2 14.05 2001–02 84.70 18. Ministry of Commerce.72 101.21 1955–56 40.56 14.5 102.1 96.79 73.3 78.98 13.6 110.15 2002–03 84.1 16.4 139.6 19.3 93.7 1.4 116.5 31.24 1997–98 94.5 39.3 1.8 141.2 485.2 152.86 77.8 33.67 5.4 8.46 106.83 1980–81 78.4 85.72 (Contd…) 19 .68 1991–92 83.2 203.5 124.4 32.68 2003–04 84.65 1.6 1986–87 66.5 77.41 13.05 2.4 104.22 1992–93 85. Export performance of India since 1950–51 (quantity in million kg and value in Rs in crores) Year Unmanufactured tobacco Quantity Value Manufactured tobacco Quantity Value Total Quantity Value 1950–51 42.17 1996–97 89.69 1991–92 71. Government of India.9 11.37 1976–77 80.6 202.8 99.36 2.

8 49.294 367.4 903.2 1050.017 4551 165.57 2.1 1997–98 136.7 2.3 23.7 770. Government of India.1 285.8 283.6 1095.0 36.48 18.5 20.6 1.4 1999–00 122.9 171.5 406.9 421.3 806.8 1996–97 117.66 13. SCV. Ministry of Commerce.0 8.8 325.0 15.1 4.244 1994–95 Quantity 159.4 2.7 56.38 2001–02 86.5 20.9 0.4 6.6 207.8 35.11 8.6 6.5 733.7 102.Unmanufactured tobacco Quantity Value Year 1994–95 Manufactured tobacco Quantity Value 44.7 972.3 8.8 1.468 5799 1654 7193 3760 2249 3030 1141 81.3 209. Table 16. Judi and rustica (chewing tobaccos).3 1.9 342.735 13.36 144.6 185.63 102.792 268.0 7.3 5. an analysis of variety-wise exports of unmanufactured tobacco shows that FCV tobacco accounted for between 60% and 82% of the total exports of unmanufactured tobacco from the country during the 1990s.7 5.6 1.89 16.7 4.08 14.9 0.04 92.49 17. The other varieties of tobacco exported include SCN.4 883.3 3.95 1995–96 72.52 7.4 6.34 115.209 2210 550 5800 4405 2497 722 1851 45.92 115.996 324.0 27.78 59.6 599.7 12.9 31.0 8.83 1998–99 82.1 361.19 634.1 888. Similarly.5 1061.71 101.73 972.9 59.68 83.8 361.19 864.45 136.52 2002–03 107. 2004 As shown in Table 16.86 130.052 Value 298. burley (all cigarette tobaccos and Lalcho-padia.4 63.813 6289 2382 9940 4120 1773 521 3160 91.6 826. 17.6 18.985 3224 1958 2911 8112 1536 8 3732 117.33 127.62 19.4 226.8 Value 1996–97 1997–98 Quantity Value (Contd…) 20 .6 1.6 2.4 267.8 43.6 434.4 17 1.8 1.7 1995–96 Quantity 54.6 21.2 10.1 3.47 13.7 0 12.8 733.7 10.5 11.04 15.622 5426 SCV 670 burley judi rustica Others Total 4402 lalchopadia 6578 6297 1390 140 70.2 7528 4010 2619 949 968 71.0 19.36 11.381 5960 7854 5249 5926 1093 8276 136.2 2.0 602.5 677.7 7.4 6. the export value of FCV tobacco accounted for 75% to 90% of the total exports of unmanufactured tobacco.2 29. Variety-wise export of tobacco products from India and percentage share in total tobacco export (quantity in tonnes and value in Rs in million) YEAR 1990–91 Quantity Value 1991–92 Quantity 1992–93 Quantity Value Value 1993–94 Quantity Value FCV SCN 47.737 825.22 100.8 88.4 Quantity 95.573 2489 556 5405 4042 2410 252 2324 72.7 5.95 2003–04 97.83 10.41 Source: Tobacco Board.9 35.1 209.466 Value 658.6 2000–01 Total Quantity Value 55.

7 0.1 6.7 4.2 100 Value 82.4 2.8 0.6 11.1 100 100 2000–01 Quantity 64.600 6710 1728 0 2488 107.6 2. mostly in unmanufactured form.3 100 1999–00 Quantity 66.6 4.5 1.4 14.6 3.4 6.7 0.2 100 Value 89.73 55.6 0.9 12.4 6.8 7.4 100 1.537 1.3 100 1998–99 Quantity 62.8 0.2 10.7 1. Despite 60 years of international trade.4 100 Value 84.6 Value 80.9 5.9 4.0 8.5 3.9 0.2 677.1 100 1994–95 Quantity 60.4 21. Exports of tobacco 21 .3 46.2 100 2001–02 Quantity 66.0 1.9 74.1 2.9 1.3 0.573 2333 2362 9345 4860 1403 952 1750 97.0 1.0 12.2 31.0 0.9 7. is probably due to the limited scope for tobacco-based products from India.4 Value 79.8 9.8 100 Value 84.4 0.7 2.4 0.4 3.3 67. Government of India.3 1.1 8.9 3.6 2.4 5.6 0.9 2.YEAR 1998–99 Quantity Value 1999–00 Quantity Value 2000–01 Quantity 2001–02 Quantity Value Value 2002–03 Quantity Value FCV SCN SCV burley 8399 lalchopadia 8349 51.9 9.5 1.1 2.447 3818 2521 478.4 100 Value 79.4 1.0 9.8 10.5 100 0.1 100 10.5 5735 2152 15.7 0.2 4.5 0.3 1.7 0.2 3.4 64.8 2002–03 Quantity 68.5 0.9 2.1 1.6 2.1 4.638 6.9 2.7 9.2 3.0 57.0 1.3 0.8 9.17 510 29.6 100 1993–94 Quantity 69.6 10.1 0 12.4 4.9 1.9 2.1 63.9 1.4 61.6 3. 2004 FCV: flue-cured Virginia The continued accent on tobacco exports.6 54.8 2.5 2.048 122.8 864.3 9.7 1508 9876 8.578 504.3 6.8 1.9 0.4 0.5 5.1 10.3 2.5 12.126 5354 1734 11.8 6908 2694 221 6773 100.2 91.5 4.186 rustica Others Total 2351 5481 82.1 7.7 3.4 3.8 2.1 Value 84.6 0.0 1.1 7.9 6.2 12.6 3.5 0.3 23. Ministry of Commerce.7 3.9 Value 78.7 Value 75.3 1.5 8.7 1.3 15.036 6026 2287 2447 86.6 Value judi Variety-wise exports share in total tobacco export (%) 1992–93 6.4 6.7 770.1 4.9 4.9 0.5 0.7 1.2 0.3 2.969 6342 681.3 3.8 1.5 6.5 1.7 2.3 2.5 1.4 5.3 100 Value 78.6 3.8 3.2 4.3 602.7 3.9 100 Value 80.4 19.3 4.2 1.9 1.2 9.7 1.2 1.8 12.9 3.8 2.2 100 2003–04 (April–03 Jan–04) Quantity 1990–91 Quantity 66.7 0.6 100 Quantity 69.8 6.6 4.7 1991–92 Quantity 69.0 0.3 0.7 6.0 81.8 4.3 12.5 1.8 4.9 4.5 0.5 5.7 100 100 1997–98 Quantity 74.9 6.0 4. India has failed to take advantage of the worldwide increase in the demand for cigarettes.8 2.9 0.0 2.2 2.2 0.9 1.5 1.366 6.715 619.3 100 Source: Tobacco Board.8 3.9 0.7 599.5 0.0 4.6 28.0 2.7 2.5 100 1996–97 Quantity 81.169 3500 2520 16.9 6.8 3.5 6.5 0.8 6.6 1.8 7.4 9.9 100 2.6 4.3 8.9 6.2 8.7 1.6 1.0 634.7 5.2 9.670 2812 10.5 0.2 7.8 16.7 100 2003–04 (April-03 Jan-04) Quantity 55.5 7.8 2.6 0.2 11.3 3.0 2.7 7.4 2.1 100 Value 76.590 20.0 3.9 1.4 6.6 2.7 24.3 4.2 6.8 52.9 16.9 1.010 482.2 3.8 0.5 27.3 27.7 100 Value 75.4 100 1995–96 Quantity 75.3 2.7 4.

The direction of India’s exports of unmanufactured tobacco is reported in Table 18.8% leads the exports of tobacco products from the country (Table 17). US manufacturers were required to certify by law that the cigarettes made in the US contain an average of at least 75% domestically grown leaf. Further. Chewing tobacco with a share of 43. Table 17 shows that the share of cigarettes in total manufactured exports increased both in volume and in terms of value from 1995–96 to 2001–02. Chewing tobacco is followed by cigarettes (29. and beedis (11. However. The US remains one of the largest importers of tobacco in the world India has failed to penetrate this market.2%). Cigarettes constitute the most widely used tobacco product in the world. except cigarettes.7%). There may be two reasons for this: (i) the flavours required by US blends are not being produced in India. (ii) from 1 January 1995 onwards. 22 . followed by African countries (10.7%). The west and east European countries together accounted for 65. South and South-east Asia were the next important destinations accounting for 13.products from India are low.9% of the total exports.7%). from the country.1%) and the Middle East (6. under General Agreement on Trade and Tariffs (GATT) the US has taken the Tariff Route Quota (TRQ) to protect its farmers. hookah tobacco paste (12. there is not much scope for increasing the exports of manufactured tobacco products. Europe is the largest market for India’s unmanufactured tobacco exports.7% of total unmanufactured tobacco exports from the country during April–March 2003.

9 43.0 761 19.076 285.2 12.5 5 0.7 5.Table 17.2 962 33.9 28.6 8439 31.1 643 26.2 13.376 26.0 36.1 62.5 Quantity Value 2883 84.7 Share in total exports (%) Cigarettes 7.1 0.2 3.0 0.1 0.1 773 30.3 16.3 Quantity 2001–2002 Value 2016 56.7 1174 37.1 0.1 16 0.4 23.3 14 0.1 12.0 15.9 13.9 17.7 78.7 6.759 34.8 4.3 61.1 2.6 5.631 185.2 0. Ministry of Commerce.3 2.7 12 0.3 5.6 29.9 6 0.540 13.3 19 0.3 2640 125 512 1.2 0.6 18.8 12.4 13.1 4.7 16.3 14.1 Total 100 100 100 100 100 100 100 100 100 100 100 100 100 100 HT.1 0. 23 .6 24.3 29.957 171. paste Chewing tobacco/ zarda Cut tobacco Snuff Others Total 1995–96 1996–97 1997–98 Quantity Value Quantity Value 884 13.4 12.4 0.883 59.4 15. Government of India.00 961 33.9 11.4 30 0.9 Beedis 5.5 6.4 18.8 317 2.4 2.3 501 4 2506 22.4 0.4 4.2 0.1 0.1 6.2 9.1 17.63 652 6.7 Quantity 1432 1999–2000 Value Quantity 31.4 1953 94.5 662 16.9 2.2 4.1 0.2 14.1 10.0 1.7 58. hookah: tobacco paste.0 0.6 21.9 7795 88.3 0.6 10.4 11 0.3 5.0 0.6 20.0 0.7 13.7 41.s8 13.0 0.8 424 6.7 9543 34.9 8. 2003 HT: paste.3 19 0.4 4.9 17.2 11.2 Others 0.0 0.2 0 0 0 0 0 0 4 0.4 998 30.5 13. paste Chewing tobacco/ zarda Cut tobacco Source: Tobacco Board.115 92.5 409 3. Product-wise tobacco exports from India (quantity in tonnes and value in Rs in crores and percentage share in total exports) Name Cigarettes Beedis HT.5 23.8 21.1 0.2 0.1 9.9 67.811 36.7 35.2 891 7.393 226.3 17.5 7.0 0.2 0.1 0.4 9.1 24.3 0.5 15.9 5.9 34.1 20 0.9 676 11.4 43.1 Quantity 1206 1998–99 Value 20.7 19.1 55.9 714 14.2 8910 34.6 1191 50.1 3.8 3.4 Snuff 0.1 0.7 1851 2000–2001 Value 46.0 1724 66.2 15.8 82.1 0.

0 11.8 32.0 26.0 1.2 4212 18.613 8032.257 4.8 1.8 2.4 532 549.7 1.3 0.7 2.3 39.2 8402 4514.115.017 388.9 8.4 1460 1.2 962 11.519 64 9.5 13.1 East Europe 41. Ministry of Commerce.5 26.6 1.8 35.6 Middle East 5.188 15.7 11.1 11.6 11.572 7811.523 486.2 8.5 5352 38.8 Middle East 8031 58.681.770 1743.4 10.5 30.3 25.288.5 48.6 56.1 2.703 86.7 2.732.1 1.3 9.9 32.1 12.0 33.1 0.4 8.1 516 6.2 33.281 58.7 29.5 26.711 17.5 0. Government of India.4 11.9 13.4 6.7 11.1 3.5 1.8 11.6 1.9 6.4 31.7 10.6 6.383 1839.1 North and South Americas Australasia 3.6 4.395.247 353.350 18.599 253.7 28.653.2 4.196.8 44.9 5.378 19.4 4392 2306.8 1.9 33.366 634.0 38.0 15.4 13.537 67.0 1.1 14.7 35.761.2 27.9 30.119 27.4 13.8 10.291 325.715 77.9 13.2 13.3 12.401 5.404.2 0.8 970 11.1 11.3 11.4 3794 1414.467 298.0 0.699 107.5 34.5 39.4 Total 100 100 100 100 100 100 100 100 100 100 100 100 Source: Tobacco Board.9 40.2 6.00.36.2 11.3 8157 33.1 25.9 2714 958.6 11. 2004 24 .738 4435.236 15.9 1.1 East Europe 56.22.7 43.5 9.07.7 5.170.9 2.2 11.6 40.298 193.5 1.0 39.5 31.3 1.8 82.Table 18.7 2.3 2.7 22.9 3.739 972.4 6.1 2.8 1.7 South and South-east Asia Africa North and South Americas Australasia Total Region-wise exports of tobacco since 1997–98 (%) West Europe 30.7 31.396 10.8 1.397.590 864.4 4.3 10.010 60.7 South and South East Asia Africa 10.7 10.478 33.107 10. Region-wise exports of unmanufactured tobacco since 1997–98 and region-wise percentage exports of tobacco (quantity in tonnes and value in Rs in crores) Region 1997–98 1998–99 1999–2000 2001 April – March Quantity Value 2002 April – March Quantity Value 2003 April – March Quantity Value Quantity Value Quantity Value Quantity Value West Europe 41.061.851 99.1 41.3 2.777 26.5 7.1 9137 70.940.4 2.0 9.

Table 19.3 0.1 0. Reserve Bank of India (RBI) Note: The total may not be exact due to rounding off of data.8 0.8 0.3 0.3 0.6 1986–87 1.8 1983–84 1.1 2. Percentage share of tobacco exports in India's total exports Year Manufactured tobacco 0.7 1994–95 0.9 0.5 0.9 0.8 0.2 0.3 0.8 1998–99 0.6 1999–00 0.1 0.1 0.9 1993–94 0. As reported in Table 19.5 0.2 0.4 2.6 0.3 0. 25 .1 0.1 0.1 0.8 1991–92 0.1 0. However. The declining share of tobacco exports to total exports in India is basically due to the sharp fall in the export share of unmanufactured tobacco.3 1.4 2001–02 0.9 1982–83 2. Ministry of Commerce.4 1996–97 0.4 2002–03 0.Tobacco has been a traditional export item for India.4 2.2 2.7 1997–98 0.6 0. 2004.1 Total 1974–75 Unmanufactured tobacco 2.4 0.9 1992–93 0.4% in 2002–03.1 0.6 1985–86 1.2 1978–79 1.5 0.2 1.3 0.7 1988–89 0.1 0.3 1995–96 0.5 1987–88 0.9 0.1 0.4 2.1 0.6 0.1 2.1 1981–82 2.0 1979–80 1. Government of India.1 2.1 0.3 1.7 2000–01 0.1 0.6 0.1 1.9 1977–78 2.1 0. the share of tobacco exports from India in its total exports witnessed a declining trend from 1974–75 to 2002–03.2 2.6 1989–90 0.5 Source: Tobacco Board.5% in 1974–75 to 0. the share of tobacco exports to total exports declined from 2.1 0.1 1.6 1980–81 1. Handbook of Statistics on Indian Economy 2002–03.6 0.4 1975–76 2.4 1976–77 1.6 0.6 1990–91 0.3 0.1 1984–85 1.9 0.1 0. The share in disaggregated forms of unmanufactured and manufactured tobacco also depicted a similar declining trend.6 0.3 0.

Employment The structure of employment in the Indian tobacco industry largely reflects the structure of the consumer market for tobacco products in India. The vast majority of positions in the tobacco industry are available either on a part-time or seasonal basis. cigarette manufacturing. where many millions of people are engaged in the industry. and in assisting in supporting family members and other people in these regional and rural communities. 26 . Seasonal employment dominates in the leaf-growing industry. Specifically. Since beedi rolling is considered to be largely a cottage industry. with relatively small contributions to seasonal employment opportunities also coming from leaf processing and from brokering. Except the beedi industry. it generates much more employment at the manufacturing stage. Other partial employment estimates reinforce the crucial role of the tobacco industry in providing employment opportunities. Within the tobacco industry. The magnitude of seasonal employment in leaf growing. the effect of the production of beedis dominates employment opportunities within the manufacturing sector of the domestic industry as this is a highly labour-intensive activity and involves much less sophisticated manufacturing techniques compared to those employed by cigarette manufacturers. especially in leaf growing. Of course. The manufacture of beedis is undertaken only by part-time employees. emphasizes the importance of the industry in providing an income to these people. The main activities in which there is full-time employment are leaf processing. the number of employees in all other sectors of tobacco manufacturing units has declined over the period from 1973–74 to 1997–98. The beedi industry in India is labour-intensive. people involved with the distribution and retailing of tobacco products will derive only part of their livelihoods from the sale of tobacco products. It is estimated from Annual Survey of Industries (ASI) data that almost 85% of employees of tobacco manufacturing industries are employed in the beedi industry (Table 20). auctions and related activities. distribution and retailing. there are some important additional characteristics of the structure of employment.

9 2.6 100 Source: Annual Survey of Industries.467 14.7 100 1991–92 39.487 4.77.028 2.59.797 4.320 2.66.4 4.654 10.377 29.5 65.28.078 11.149 3.4 4.090 16. cheroots and cigarette tobacco.6 6.03.77.8 2.08.978 50.10.476 14.540 8.86.562 16.65.Table 20.52 11.8 2.223 16.537 16.6 2.9 27.8 100 1995–96 42.745 12.939 3.5 7.324 4.96.5 57.6 83.506 3.7 100 1992–93 52.580 29.57.12.042 16. 226: manufacture of Beedis.6 1.4 2.9 5.189 15. 228: manufacture of snuff.477 15.8 0.5 4.0 5.327 3.974 10.078 13.4 0.728 4.6 72.390 1.8 58.816 19.7 100 1984–85 87.7 100 1976–77 1.720 2.651 26.7 100 1974–75 1.7 100 1980–81 1.225 57.266 8.387 3.1 2.8 85.593 1. 1997–98.194 35.7 2.067 27.3 100 1996–97 31.93.9 55.95.5 2.76.4 100 1979–80 1. redrying and other operations.4 59.7 4.574 1.9 100 1994–95 45.452 8.1 82.426 4.979 14.314 2.9 77.3 79.9 84.484 3.1 85.102 15.316 10.217 8.8 2.96.248 9.089 3.384 4.00.22.17.5 2.9 0.692 9.01.020 4.483 5.660 3.519 14.6 81.0 1.8 0.8 2.12.599 11.609 13.34.586 9.52.311 6.803 2.4 0. 227: manufacture of cigars.506 4.7 85.02.027 4.195 4.855 10.5 68.736 4. Number of employees working in the tobacco manufacturing sector Year Number of employees Sector 225 Sector 226 Sector 227 Sector 228 Share (%) Sector 229 Total Sector 225 Sector 226 Sector 227 Sector 228 Sector 229 Total 1973–74 1.9 2.00.0 64.0 100 1988–89 50.62.4 2.7 3.430 3. Central Statistical Organization. chewing tobacco and other tobacco products.4 2.08.6 100 1981–82 1.53.7 4.861 1.2 87.411 3.4 100 1985–86 59.43.0 3.245 10.431 2.9 100 1993–94 48.4 3.280 11.314.4 62.7 81.06.2 2.614 9.2 1989–90 42.2 2.968 8.014 5.759 17.102 3.723 3.475 6.249 4.3 65.4 100 1986–87 51.19.4 2.5 0.18.52.1 85.068 14.5 6.90.94.5 100 1983–84 1.608 3.02.850 9.71.2 7.54.93.657 9.3 4.014 14.198 3.4 100 1977–78 1.060 4.08.667 65.2 2.722 10. New Delhi 225: tobacco stemming.3 1990–91 50.3 32.334 13.9 2.157.98.04.930 7.9 2.14. cigarette.850 13.163 2. zarda.885 2.886 4.1 4.1 3.61.618 15.035 33.5 100 1978–79 1.521 8.453 10.655 12.62 18.658 13.159 5.451 11.057 51.918 2.318 2.434 3.414 10.05.6 9.297 10.365 1.5 2.482 16.899 3.8 100 100 0.073 2.920 7.601 4.18.8 100 1987–88 41.2 1.68.44.420 35.550 10.33.3 3.7 8.4 3.073 3.97.58.123 17.863 17. catechu and chewing limes 27 .177 4.562 53.3 100 1982–83 1. 229: manufacture of pan masala.7 4.52.560 28.7 3.530 6.9 100 1975–76 1.94.91.2 100 1997–98 53.0 2.244 33.632 10.9 1.6 4.1 0.483 2.853 17.1 2.633 16.445 9.545 3.082 2.37.

Excise Revenue Taxes on tobacco have long been debated in various countries. such as beedis. zarda and snuff.768 crores which is 10. 28 . In addition. chewing tobacco and smokeless tobacco. In many countries both forms of ad valorem and specific taxes are levied simultaneously on tobacco products. the primary form of taxing tobacco in India was through the levy of a tax on all types of leaf tobacco purchases. account for 81% of the national consumer market and yet they contribute only 12% of the total tobacco excise collected from tobacco products (Indira Gandhi Institute of Development Research 2000). The federal government raises revenue from the sales of all types of tobacco products predominantly through the imposition of excise duty calculated on an ex-factory basis. beedis. Total excise duty generated by tobacco products was Rs 5. Consequently. an excise duty was levied on finished products. the government abolished the levy on leaf tobacco because (i) many people thought it was a tax on the poor farmers (producers). In that year. Until 1979. the entire tax burden was shifted to the finished products. Tobacco excise has become a particularly important source of revenue for the national budget.8% of the total excise revenue collected. The tobacco industry in India is subject to a range of taxes imposed by the federal and state governments. the structure of taxes on tobacco in India is slightly different. including those used for cigarettes.246 crores was collected by the Indian Government from excise tax (Table 21). A recent study of the Indian tobacco industry concluded that traditional tobacco products. Rs 53. In fact. as well as an instrument for harassing them in the name of tax compliance. During 1998–99. The data on revenue from excise duty highlights the preferential treatment accorded to the unmanufactured tobacco sector through the imposition of a lower excise on traditional tobacco products than that imposed on manufactured products. and (ii) it was becoming administratively difficult to collect the tax.

4 10.87 1994–95 37.426 1398.011 716.2 120.602 89. 3.1 12.061 84.059 835.07 1993–94 31.6 466.500 755.80 1989–90 22.7 1556.80 9.1 10.83 10.8 297.321 75.1 6.90 1977–78 4.4 8.9 2.8 37.421 834.37 10.00 11.5 13. 1994.8 9.0 4.5 1974–75 3.0 9.347 3500.5 63.56 1985–86 12.4 85.8 4.0 9.0 3500.4 9.6 17.1 8.1 235.7 10.25 1982–83 8.1 7.103 2180.7 8.448 105.87 9.6 1398.1 12.3 11.151 1177.696 2749.9 12.4 12.0 5274.125 2357.0 11.6 5.9 226.0 10.84 10.3 755.1 1070.4 2.6 109.0 835.0 9.37 1995–96 40. 29 .4 9.92 11.2 4.04 10. New Delhi.9 629.2 12.841 1845.1 2357. 2.0 1961–62 489 43.759 78.1 10.962 5274.67 11.25 11.8 9.5 7.7 5.3 14.1 4.7 73.9 46. Export Potential of Tobacco Sector.7 4.2 291. Reserve Bank of India (various issues). Budget Documents.2 11.9 1962–63 599 48.0 4036.38 9.2 125.6 8.36 9.9 449.9 88.7 2.23 1997–98 47.49 12.6 387.62 1981–82 7.6 12.149 69.6 12.9 1971–72 2.7 155.76 10.8 834.75 1979–80 6.6 8.7 58.0 3105.2 1966–67 1.8 517.222 1070. Excise revenue collection from the tobacco sector Rs in crores Year Total excise duty Share in percentages Excise on unmanu factured tobacco Excise on manufa ctured tobacco Total excise on tobacco Excise on unmanu factured tobacco Excise on manufa ctured tobacco Total excise on Tobacco 1960–61 416 40.7 7.87 9.9 3.56 10.87 1990–91 25.38 1991–92 27.53 11.51 8.0 8.0 3127.8 3.956 1404.Table 21.9 1969–70 1.7 1976–77 4.8 58.5 1845.92 1980–81 6.231 89.0 7.1 7. NCAER.00 1998–99 53.3 716.2 1967–68 1. Report on Currency and Finance.1 1404.2 183.9 6.5 9.47 10.36 10.1 277.5 4.357 111.008 4154.8 2180.4 1177.1 9.832 3105.697 3127.09 9.1 9.845 92.5 1968–69 1.0 4154.47 1984–85 11.187 4036.87 1978–79 5.4 193.524 77.0 5.4 1965–66 898 62.84 1986–87 14.9 99.1 147.4 9.3 502.37 9.246 5768.5 108.5 1972–73 2.0 2749.4 13.1 1964–65 802 61.4 12.8 402.324 94.7 5.04 1996–97 45.3 11.2 13.51 1988–89 18.83 Source: 1.36 1983–84 10.3 11.8 11.470 1556.23 9.9 196.0 357.5 197.7 324.07 10.1 2.0 5768.9 1970–71 1.0 10.0 9.93 1992–93 30.8 572.5 1973–74 2.0 10.221 99.9 1975–76 3.3 1963–64 730 54.0 10.93 9.4 2.9 24.4 4.76 1987–88 16.034 67.7 12.62 11.2 33.9 12.5 19.

Similarly. cigarettes contributed Rs 3. which account for one-fifth of consumption but contributes nearly four-fifths of the excise revenue. this figure had increased to 70% and reached 82% in 1981–82. The profit of the cigarettes and cigarette products industries is reached 78.427 crore out of the total contribution of Rs 4. As mentioned earlier. Irrespective of large contribution of cigarette industries to excise revenue.More than four-fifths of the contribution of tobacco comes from the cigarette segment. in more ways than one.2% of total profit of all tobacco industries in 1997–98 from 61. 2004). the contribution of cigarettes reached 88% and has stabilized around that level (Ranade et al. Summary Tobacco industry in India is one of the largest in the world with India having the largest area under tobacco cultivation. it is showing an increasing trend of profit as shown in Table 22.2% in 1979–80. Tobacco processing falls under both organised 30 . However. the contribution of excise revenue from tobacco has reduced from 14% in 1960–61 to 10. the profit margin of bidi industry is declining over the years even incurred losses during 1982–83 and 1983–84. By 1971–72. In 1995–96. However. the bulk of tobacco consumption in India is in traditional forms such as beedis and chewing and non-smoking products whereas the excise revenue from tobacco is largely dependent on cigarettes.8% in 1998–99. In 1951–52. cigarettes contributed 25% of the total excise collected from tobacco. processing and distribution facilities. as shown in Table 21. the profit share of pan masala and catechu industry is also increased significantly over the years. In 1987–88. The slowdown in the share of excise revenue is partly due to the nature of the tobacco consumption pattern in India and partly due to the excise rates over time. Tobacco is an agrobased item produced and consumed both in the unmanufactured and manufactured form in India. It plays an important role in the country’s economy. India has well integrated tobacco cultivation.036 crore from tobacco products.

2 3090.3 1.4 3.9 6.5 60.8 1080.6 4150.8 460.7 -17.4 58.8 0.1 23.1 3.5 25.23.4 0.2 2336.1 156.8 158.8 10. 228: manufacture of snuff.7 -5.2 33.6 885.3 66.1 3.6 39.7 48.8 65.1 855.4 100 1994–95 765.2 1. Profit of the tobacco manufacturing sector Profits in (Rs in million) Year Sector 225 1979–80 61.9 0.6 66.5 100 1993–94 744.0 3.9 0.6 43.7 7213.7 214.7 6694.6 1981–82 1982–83 Sector 226 Sector 229 Shares in percentages Sector 227 Sector 228 Total Sector 225 Sector 226 Sector 227 Sector 228 Sector 229 Total 1.4 6.2 62.3 173.0 307.5 69.7 7.0 9.9 2361. cigarette.5 -4.3 50.1 4.7 47.7 9.2 100 1992–93 608.8 320.3 187.7 57.0 11. 226: manufacture of Beedis.5 247.4 61.0 100 56.1 145.5 1138.3 2054.0 -361.9 1457.8 3578.7 100 1997–98 496.71 0.2 0.0 100 2.2 25.9 5.7 2130.3 4019.1 -39.6 150.8 100 Source: Annual Survey of Industries.3 9.3 20.4 47.3 8.0 100 1989–90 103.8 5976.4 414.4 11.2 90.0 380.2 69.71.9 2.6 39.2 86.8 5517.1 153.2 100 1996–97 3897.6 166.8 1805.0 100 1987–88 -74.3 1653.71 3.091. chewing tobacco and other tobacco products.1 11.0 100 1985–86 -3.0 689.0 91.4 -0.2 3.5 58.6 23.7 4. Central Statistical Organization.5 6328.9 39.1 62.6 4.0 185. 1997–98.0 100 1988–89 87.0 100 1986–87 -31.9 45.0 774.1 7.4 100 1991–92 367.1 848.0 4.8 1745. 227: manufacture of cigars.9 0.209.0 1026.0 7610.2 332.3 100 1995–96 564.2 644.4 361.21 3. zarda.0 100 1984–85 153.1 1635.9 2906.7 -1.5 508.7 7.3 1980–81 32.8 30.0 360.2 70.7 929.5 1.3 262.6 23.1 780.9 -1.394.6 5.6 50.1 2345.3 26.5 3.1 10.4 143. cheroots and cigarette tobacco.4 2. redrying and other operations.0 100 1983–84 188.0 11.3 12.8 0.4 3.5 748.6 -0.3 48.1 17.3 78.2 0.0 14.7 47.7 9.3 64.0 100 429.8 2876.2 2.70.1 0.9 1378.2 0.8 4. New Delhi 225: tobacco stemming.0 22.7 1574.5 9.1 4.5 27.9 324.0 14.0 15. 229: manufacture of pan masala.Table 22.9 6.1 5.9 8281.3 4417.4 325.4 -27.2 810.5 8909.8 11.1 120.1 100 1990–91 187.3 40.2 529. catechu and chewing lime 31 .3 17.

There are. Understandably. it is difficult to impose drastic curbs on the industry. As a first step. sustained and widespread pressures to impose/tighten controls on cigarette sales. In spite of its proven adverse implications for public health. and other forms of tobacco products like pan masala. many serious public health concerns about the effects of smoking and chewing of tobacco. The process will no doubt be slow and gradual. there are strong. smoking and advertising. however. Finding alternatives for tobacco cultivators and those earning livelihood in production and along the distribution chain need to be given top priority. further expansion of the industry should be curtailed at any cost. It has been a major source of tax revenue. zarda. In a country facing serious unemployment problem. 32 . etc. The industry makes a sizeable contribution to seasonal and fulltime employment and has significant export potential. however.and unorganized sectors: manufacture of cigarettes can be classified under ‘organized sector’ and the ‘under unorganized’ sector consists of beedis. the industry continues to be find support in many quarters on the grounds of its contribution to employment and national production.

Central Statistical Organisation. Reserve Bank of India (RBI). National Accounts Statistics. United States Department of Agriculture (USDA). 55th Round. Ministry of Agriculture. Opportunities and challenges in tobacco. National Sample Survey (NSS).References Annual Survey of Industries. Reserve Bank of India (RBI). (2004). Indian Institute of Foreign Trade (IIFT). Handbook of Statistics on Indian Economy 2002–03. Consumption of some important commodities in India: 1999–2000. Government of India (2003). IIM Calcutta. “Agricultural Statistics at a Glance – 2003”. Ministry of Agriculture. Directorate of Economics and Statistics. New Delhi. Report on Currency and Finance. Indira Gandhi Institute of Development Research (IGIDR). Ranade Ajit. Department of Statistics and Program Implementation. 2003. The Tobacco Industry: Opportunities and Challenges. Ministry of Commerce. Sarkar.gov (Accessed on 22nd July. (1994). 33 . Tobacco Board. Government of India. (2002). New Delhi. 2004). Government of India. USA. New Delhi. Export Potential of Tobacco Sector. Available from: URL: http//:www. Foreign Agricultural Service. Directorate of Tobacco Development. 1997–98. India. Government of India. Anindya Sen. USA. New Delhi.cdc. Centre for Disease Control and Prevention. India. National Council of Applied Economic Research (NCAER). Mumbai. Medium term plan for tobacco exports from India and strategies for the next five years. (2000). Central Statistical Organization. Government of India. Various Issues. Ministry of Agriculture.