India Tobacco Exports Seen at $700 Mln in 2008/09

Source from:  By Rajendra Jadhav 11/06/2008

MUMBAI, Nov 5 (Reuters) - India is likely to export a record $700 million worth of tobacco in 2008/09, up 17 percent from an earlier estimate, as a global output shortfall forces overseas buyers to source it at higher prices, a top official said. "Good demand from international market and weak rupee were supporting exports," J. Suresh Babu, chairman of the Tobacco Board, told Reuters on Wednesday. Indian rupee has lost more than 15 percent this financial year. Unmanufactured tobacco exports jumped 81 percent to $312 million in the first half of 2008/09, compared to $172 millioin a year ago. In the same period, exports of tobacco products rose 6 percent to $64.1 million. "We haven't set any export target. But considering the present trend we think exports may rise to $700 million," said Babu, who in June this year expected exports to rise to $600 million. At $700 million, exports in the year ending March 2009 would be 39 percent higher from $503 million a year ago. "In last few months exporters were very aggressive in the market. But in coming months, they may slow down buying as China is offering tobacco at lower price," Bellam Kotaiah, president, Indian Tobacco Association, said. Global tobacco companies like British American Tobacco (BATS.L: Quote, Profile, Research), Japan Tobacco Inc. (2914.T: Quote, Profile, Research), Philip Morris International and Imperial Tobacco Plc (IMT.L: Quote, Profile, Research) are main buyers of Indian leaf. Out of total output of Flue Cured Virginia (FCV), a premier grade used for cigarette-making, India usually exports around 55 percent, while the domestic market consumes the rest. ITC Ltd (ITC.BO: Quote, Profile, Research), a Kolkata based company, Godfrey Philips India Ltd (GDFR.BO: Quote, Profile, Research) and Vazir Sultan Tobacco are leading buyers in the domestic market. Rising exports were keeping prices firm in the domestic market and prompting farmers to increase acreage. Auctions were going on at Mysore in southern state of Karnataka and price of FCV was 104 rupees per kg, up 53 percent, compared with 68 rupees a year earlier, Tobacco Borad data showed. Karnataka, the second biggest producer, is expected to harvest 105 million kg of tobacco in 2008, 20.7 percent more than a year earlier, as farmers increased acreage. India banned smoking in public places last month in an attempt to fight tobacco use blamed, directly or indirectly, for a fifth of all deaths in the world's third-largest consumer. Enditem