Indian Gutkha Brands Shifting Production to Nepal

Source from:  Tobacco Today Online 02/17/2012

Indian producers of gutkha have shifted their operations to border towns in Nepal after the Indian Supreme Court banned production of the stimulant in plastic packets on April 1 last year. India's famous Goa brand of gutkha (a preparation made of crushed betel nuts and varied flavorings) is set to start production from Birgunj. The Sardar brand is being produced from Biratnagar. Another international brand, Kuber, is planned to be manufactured in Nepal. Gutkha brands like Raunak, Kangana and Sansar are being produced in factories established in Nepal's border towns. After the Department of Revenue Investigation raided Sona Tobacco, a gutkha factory in Narayanghat, it has moved to Butwal where it is producing gutkha under the brand names of Pukar and Bhola. Indian companies are using their original brands to register their companies in Nepal. There are two dozen gutkha factories in Nepal producing different brands of gutkha like Paras, Pinky, Aaha, Kamal, Shikhar, Nidhi, Paan King, Twenty-Twenty, Pukar and Bhola, among others. A Nepali businessman involved in business said that Indian producers chose Nepali land to produce gutkha given the possibility of Indian Supreme Court giving final verdict citing its effect on health. Indian Supreme Court is scheduled to give verdict on the issue soon. The source said that as it easier to export to India from bordering Nepali towns, Indian producers established their factories here. "As majority of the productions are smuggled to India, the country incurs revenue loses," said a business person from Adarsha Nagar. Although the factories are stationed at Nepal, raw materials as well as workers are brought from India. "Fearing the leakage of information about product quality and quantity, owners are bringing workers from India," said a Nepali businessman involved in the same business. After the Indian Supreme Court banned production of gutkha in plastic packets citing environmental concerns, Indian gutkha producers have been using paper wrappers. However, consumers disliked paper wrappers due to earlier deterioration of the contents. The gutkha produced in Nepal is exported to India. There are a number of wrapper factories in Nitanpur in Bara, Bahuarwabhat in Parsa and Adarsha Nagar in Birgunj. Traders have been packing gutkha illegally in their warehouses without registering and evading tax. "Although 22 firms have obtained licenses, a majority of them have not submitted tax details," said an official of the Inland Revenue Office, Birgunj. Enditem