India: Government Likely to Ban Sale of Loose Cigarettes, Rs 20000 Fine for Smoking in Public

Source from:  Economic Times  09/10/2014

The government is considering a proposal to ban the sale of loose cigarettes, a move that will hit ITC and other cigarette makers hard as 70 per cent of retail takes place in this form.

This is one of the many measures proposed by an expert panel set up by the health ministry. Other suggestions include raising the age limit for consumption and increasing the fine for smoking in public spaces to Rs 20,000 from Rs 200, apart from making this a cognizable offence.

If accepted, these suggestions on curbing tobacco consumption could soon be part of tougher legislation being drafted by the Modi government, which it wants to introduce in the winter session of Parliament as it looks to curb the damage caused by the habit in the form of cancers, cardiovascular diseases and other health issues. Headed by the Delhi government's former principal secretary Ramesh Chandra, the expert panel submitted its report to the health ministry last week.

The expert panel also wants the government to impose a harsher penalty of Rs 50,000, up from Rs 5,000 now, on manufacturers for violating the provision on carrying pictorial warning signs on cigarette packets. Members of the committee, who spoke to ET on condition of anonymity, said the panel also recommended raising the age limit for tobacco consumption to 25 years from 18 years, banning advertisements at the point of sale, and increasing the size of health warnings to cover almost.

Currently, they cover 40 per cent of the pack front.Discouraging tobacco consumption appears to be high on the government's agenda. Just five days after being sworn in as prime minister, Modi had tweeted: "On World No Tobacco Day, let's pledge to spread awareness on the risks of tobacco consumption & work to reduce tobacco consumption in India."

This seems to have had an impact on stocks. Since Modi came to power on May 26, only ITC has moved up (3.7 per cent) while rival stocks have fallen. Godfrey Phillips has lost 6.4 per cent, VST Industries 8.5 per cent and Golden Tobacco 30 per cent. In contrast, the Sensex has gained more than 10 per cent in the same period. ITC and Godfrey Phillips represent more than 90 per cent of the industry. Tobacco Institute of India Director Syed M Ahmad refused to comment on any specific proposal since the lobby group is yet to see the panel report.

He said cigarettes form the smallest segment of tobacco consumption in India and any such moves will have little effect on other forms in the unorganised sector. These are largely non-compliant with laws, evade taxes and are far more affordable for tobacco consumers, he said. "Hence, the recommendations of the panel will only increase the level of contraband and illegal trade and shift consumption of tobacco to other forms as is evident today. In the process, it will severely impact the legal domestic cigarette industry in India and the livelihoods of over 38 million people who are engaged in tobacco whilst giving a fillip to smuggling," Ahmad said.

ET reported last month on the constitution of the expert committee by Health Minister Harsh Vardhan to propose amendments to the Cigarettes & Other Tobacco Products Act, 2003 (COTPA). The government is working toward making its laws more compliant with the World Health Organisation's Framework Convention on Tobacco Control, or FCTC, a treaty which lays down a set of universal standards to limit the use of tobacco worldwide. India ratified the FCTC in 2004, a year after enacting its own anti-tobacco legislation. The government is currently preparing a Cabinet note based on the recommendations of the panel. Enditem