Russia May Purchase Tobacco From India

Russia might purchase a huge quantity of tobacco from India for manufacturing of cigarettes and become a good market for the country. The Indian tobacco growers have been demanding for an increase in export efforts to the CIS countries which had come down in the recent years.

G Siva Ram Prasad, secretary of the Tobacco Growers Welfare Association, told Business Standard that commerce minister Murasoli Maran had assured them that a deal with Russia for export of tobacco was likely to be finalised within a few days.

Tobacco growers from Andhra Pradesh had met the commerce, finance and agriculture minister to help the sector, which has been affected by falling prices since 1999. Cigarette companies are citing low sales as a reason for not lifting stocks. Demand for cigarette-grade Virginia tobacco had declined as the share of cigarettes in the total tobacco consumption was now 14 per cent compared to 23 per cent a few years back.

Due to the high excise duty on cigarettes, companies have to pay around Rs 580 per kg for tobacco which they purchase at Rs 45 per kg from farmers. In addition, there is a 15 per cent surcharge imposed after earthquake in Gujarat.