Itc For Ban On Duty-Free Imports Of Cigarettes

ITC Ltd has sought a bar on duty-free imports of foreign brands of cigarettes into the country in a bid to stem the adverse effects of grey market operations.

According to sources, among the suggestions put forward by ITC for the government's perusal include:

nGreater vigil at point of entry into the country of smuggled brands;

nBan on duty-free import of the product; and

nA suitable change in excise laws, which would render domestically-manufactured products competitive.

ITC is in communication with government authorities on the issue of grey market as the company is serious about tackling this menace on a war-footing ever since it has started launching BAT brands, manufactured and marketed by ITC.

 

According to sources in the tobacco industry, regular hikes in the excise duty on cigarettes was unfair as the grey market of internationally famous premium brands escapes the excise nets, when a more rational duty regime could lure international tobacco majors to set up shop in the country. Meanwhile, one of ITC's brands Wills Flake Filter which was replaced by other brands over the years due to several excise and price changes is now been actively promoted by the company, and is currently sold at Rs 10 for a pack of 10s. It is essentially catering to a middle and upper-middle class segments of society. ITC is following a two-pronged strategy to grapple with the problem of grey market operations. It is lobbying strongly with the government to crack down on the grey market. ITC has been impressing upon the government that stern punitive steps need to be taken against grey market operators.

The grey market is estimated at over Rs 300 crore.

The grey market had been quick to react to the launch of ITC's Bensons & Hedges. The B&H launch by ITC Ltd in two variants, B&H Special Filters and the new B&H Light, both priced at Rs 50 for a pack of 20s.

Prices for all the brands in the grey market, have been varying between Rs 55 to Rs 60 for a pack of 20s.

The grey market costs the government anywhere between Rs 160-170 crore by way of lost revenues. It also costs the government $50 million by way of lost foreign exchange.