India: Tobacco Board Eyes Global Markets to Boost Slow Trade

Source from:  Financial Chronicle 07/07/2015

Tobacco trade will get a boost as efforts are underway to promote exports to explore new markets as well as to retrieve old markets that India has lost out on.

In a big push, global companies will be allowed set offices in Guntur and for India to participate in tobacco auctions and leaf processes, a top official of the Tobacco board said.

"Tobacco board will look to aid in export promotion with the support of Indian embassies. It will tap old markets like Russia and enter new markets like Kazakhstan, Uruguay and unexplored countries like China. The RBI's earlier directions restricting foreign companies from participating in tobacco related activities have since been amended. This allows foreign companies setting up offices in Guntur or elsewhere in India. We will notify this to all global big companies," Tobacco Board chairman K Gopal told FC.

Meanwhile, the board held meetings with traders, growers and other stakeholders in Vijayawada to discuss issues confronting the tobacco trade. Union minister of state for commerce and industry, Nirmala Sitharaman, who presided over the meeting, assured that tobacco would be purchased by traders within a price band that would be based on five years' average prices, according to the board chairman.

FC on Friday reported that tobacco farmers were witnessing lukewarm response in the ongoing auctions with only 46.5 million kg tobacco purchased as of June end, which is less than 50 per cent of the over 100 million kg sold during the same time last year.

The growers had said that average prices that tobacco stocks this year were fetching were lower than last year. Exports were slow due to delayed orders because of excess carryover stocks and excess production globally, in addition to preferring their nurtured contract farming countries.

Gopal said traders have now agreed to purchase the entire authorised crop of 172 million kg in all regions. The purchases are to be completed by end of September. The traders agreed to pay Rs 109 to 114 per kg for the traditional bright variety, Rs 97 to 102 for medium variety and Rs 62 to 67 for low-grade tobacco.

They also agreed to pay Rs 127 per kg for NLS bright grade and Rs 113 for medium grade. However, no indicative price has been given for the low grades. It was also decided that all would abide by the crop size and quality standards, he said. Enditem