Tobacco products have been used in India for centuries. The cigarette industry is considered one of the oldest in this country.
India is the second largest manufacturer of cigarette products in the world after China, according to statistics. It produces 572 million kilograms of tobacco annually. The tobacco industry is divided into three completely different sectors: bidis, smokeless tobacco (mostly chewing tobacco) and cigarettes.
In spite of being the second biggest producer, India is only the ninth exporter of tobacco and smoking products in the world after Brazil, China, Italy, Malawi and USA. Nowadays India is exporting tobacco to more than 80 nations all over the world.
Of the total tobacco produced in India, only one-third is flue-cured tobacco that is appropriate for cigarette manufacturing. Most of the tobacco is suitable for the production of chewing tobaccos, bidis and other lower priced smoking products, which are not popular outside the country.
The Indian tobacco market is dominated by the three major tobacco companies, primarily International Tobacco Company (ITC), which is one of the India’s outstanding private sectors with a market capitalization of about US $ 33 billion, a return of US $ 7 billion and with 72% market share. And the last but not the least important manufacturers are – Godfrey Phillips with 12% and Vazir Sultan Tobacco Company (VST) with 8% share of the market.
Cigarette advertising contributed to Rs 3000-4000 million every year to the Indian advertising industry, before the ban on tobacco advertising was introduced. However tobacco companies continue advertising and promoting their products through point-of-sale. Besides the local popular cigarette brands as Gold Flake and Wills, such world known smokes as Marlboro already gained big popularity among Indian smokers.
Chewing tobacco is a traditional smoking product in India. Of all tobacco produced in the country approximately 48% are chewing tobacco, 38% bidis, and only 14% regular cigarettes. Thus such products as snuff, chewing tobacco and bidis constitute 86% of India’s entire tobacco production, in comparison to 90% of cigarette production in the rest of the world.
The use of cigarettes in India is merely a tenth of the world average. Cigarette smokers pay about 85% of the total tax proceeds derived from tobacco. Tobacco taxes in India are below the rate advised by the World Bank. For example of the 1.1 billion smokers worldwide, 182 million or 16% live in India thus accounting for about 102 billion cigarettes consumed per year. The recent studies have demonstrated that 44-63% of all men and 12%-31% of all women use some form of tobacco. The smoking rate among teenagers aged 13-15 in 12 Indian states, is higher by 40% than in nine north eastern states.
The World Health Organization and World Bank recommend prohibiting all forms of tobacco promotionand advertising. Such bans could reduce the worldwide demand of tobacco by around 7%. Despite industry denials, the overwhelming majority of independent studies show that tobacco advertising leads to an increase in its consumption.