Business Standard

WHO imposes Rs 250-cr tobacco tax on India

Anindita Dey  |  Mumbai 

The (WHO) has imposed a Rs 250-crore tax on India, for non-compliance of the (FCTC) by the WHO.

Official sources said, the tax called as “solidarity tobacco tax” has been imposed on 43 countries for not complying with the proposed anti-tobacco measures in 2008-09.

The amount is an annual tax to be paid for each year, since 2009, till it fully complies. Countering the move, the have questioned the validity of WHO as a body to put a tax on any country. It can advise and recommend measures and countries could do their best to comply after taking into account their specific issues and problems, said a senior official source.

The ministry of health , however, has conveyed to the WHO, steps taken by it for cutting down tobacco usage. India has ratified the WHO — FCTC in 2004 and as on date 173 countries, representing 87.4 per cent of the world’s population, are parties to the treaty. In the light of the tobacco-control treaty, it is proposed to reduce the area under tobacco cultivation in India , particularly the non-exportable types of tobacco, from the present 0.45 million hectares to 0.20 mha by the end of the 12th Five-Year Plan. There would be then a targeted production of 250 million kg of exportable types of tobacco viz, Flue-cured Virginia (FCV), Burley and Oriental only.

The Union commerce ministry is also of the view that it is not easy to cut down production immediately, as around 36 million people in the country depend on tobacco production, processing and marketing. Across value chain, farmers, workers have to be assured alternate and remunerative crops and jobs.

Meanwhile, the agriculture ministry has already started the process of cutting down the production. It would identify viable alternative crops to be grown instead of tobacco and fix the remuneration to be given to farmers for winding up cultivation, of one of the most valuable cash crops. This would be done in co-ordination with the Central Tobacco Research Institute (CTRI) and the health ministry, the nodal ministry for tobacco production control.

On the employment side, the commerce ministry is co-ordinating with ministry of rural development to run tobacco-employment schemes in processing industry under other government employment-guarantee schemes.

In India, tobacco enterprise contributes Rs 20,000 crores annually, through foreign exchange earnings and internal excise revenue.

CTRI has suggested various sets of alternative crops to the ministry for this programme. Officials said, farmers would have to grow two sets of crops in place of one to make good the loss they might incur on account of not growing the cash crop.

They added, farmers could grow one kharif and one rabi crop to get the same value. In Karnataka, tobacco farmers could switch to kharif/rabi mix of ragi/wheat, while in West Bengal, the mix could be potato/wheat. In Tamil Nadu, the mix could be drumstick/chilli or vegetables, jowar, sunflower, or even banana. Now bamboo, another high value cash crop has been suggested to the farmers. Ends

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WHO imposes Rs 250-cr tobacco tax on India

The World Health Organisation (WHO) has imposed a Rs 250-crore tax on India, for non-compliance of the Framework Convention on Tobacco Control (FCTC) by the WHO.

The (WHO) has imposed a Rs 250-crore tax on India, for non-compliance of the (FCTC) by the WHO.

Official sources said, the tax called as “solidarity tobacco tax” has been imposed on 43 countries for not complying with the proposed anti-tobacco measures in 2008-09.

The amount is an annual tax to be paid for each year, since 2009, till it fully complies. Countering the move, the have questioned the validity of WHO as a body to put a tax on any country. It can advise and recommend measures and countries could do their best to comply after taking into account their specific issues and problems, said a senior official source.

The ministry of health , however, has conveyed to the WHO, steps taken by it for cutting down tobacco usage. India has ratified the WHO — FCTC in 2004 and as on date 173 countries, representing 87.4 per cent of the world’s population, are parties to the treaty. In the light of the tobacco-control treaty, it is proposed to reduce the area under tobacco cultivation in India , particularly the non-exportable types of tobacco, from the present 0.45 million hectares to 0.20 mha by the end of the 12th Five-Year Plan. There would be then a targeted production of 250 million kg of exportable types of tobacco viz, Flue-cured Virginia (FCV), Burley and Oriental only.

The Union commerce ministry is also of the view that it is not easy to cut down production immediately, as around 36 million people in the country depend on tobacco production, processing and marketing. Across value chain, farmers, workers have to be assured alternate and remunerative crops and jobs.

Meanwhile, the agriculture ministry has already started the process of cutting down the production. It would identify viable alternative crops to be grown instead of tobacco and fix the remuneration to be given to farmers for winding up cultivation, of one of the most valuable cash crops. This would be done in co-ordination with the Central Tobacco Research Institute (CTRI) and the health ministry, the nodal ministry for tobacco production control.

On the employment side, the commerce ministry is co-ordinating with ministry of rural development to run tobacco-employment schemes in processing industry under other government employment-guarantee schemes.

In India, tobacco enterprise contributes Rs 20,000 crores annually, through foreign exchange earnings and internal excise revenue.

CTRI has suggested various sets of alternative crops to the ministry for this programme. Officials said, farmers would have to grow two sets of crops in place of one to make good the loss they might incur on account of not growing the cash crop.

They added, farmers could grow one kharif and one rabi crop to get the same value. In Karnataka, tobacco farmers could switch to kharif/rabi mix of ragi/wheat, while in West Bengal, the mix could be potato/wheat. In Tamil Nadu, the mix could be drumstick/chilli or vegetables, jowar, sunflower, or even banana. Now bamboo, another high value cash crop has been suggested to the farmers. Ends

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