ITC chief calls for let-up on cigarettes

The cigarette industry is facing one of the steepest rates of taxation, with the GST increasing cess

To kill a domestic (cigarette) brand in favour of a smuggled one is not in the interest of the country, ITC chairman Y C Deveshwar said at a press conference following the company’s annual general meeting.

The cigarette industry is facing one of the steepest rates of taxation, with the Goods and Services Tax (GST) Council recently increasing the cess on this. In six years, taxes have gone up by 202 per cent.

Deveshwar said anti-tobacco groups were focused on only 11 per cent of the consumption; “89 per cent of the consumption is non-cigarettes”. He added that there were competitive interests and vested interests here, with smuggled products now 20-25 per cent of the total cigarette industry. 

“Will for some vested interest we kill an Indian brand and let a foreign brand succeed? India is one of the very few countries where the cigarette brands are all Indian,” he said.

He added that ITC’s contribution to the exchequer in the past five years had aggregated to Rs 140,000 crore. “But, the decision  (restrictions on cigarettes) is with the decision makers and we accept it. And, we are building other businesses. It’s a nation-oriented company.”

Earlier in the day, Deveshwar told his shareholders that the non-cigarette segments now account for 58 per cent of the net segment revenue, having grown 18-fold since 1996. “Today, the non-cigarette businesses deploy

77 per cent of your company’s operating capital and 88 per cent of the employee base, reflecting the radically transformed character of your company,” he said.

ITC was the third largest foods company and in the not too distant future, would become the number one. “We are the number one paper company in India,” he noted. He said ITC would continue to do things that were good for India, build Indian brands.

Rising Taxes
·         In the last six years, taxes on cigarettes have gone up by 202%
·         Smuggled product is now 20-25% of the total cigarette industry
·         89% of tobacco consumption is non-cigarettes
·         In the past 5 years, ITC’s contribution to the exchequer aggregated to Rs 1,40,000 crore