Hemant Goswami talked about the "Economics of Smokeless Form of Tobacco." This presentation is part of the talk about how smokeless variant of tobacco is overtaking the smoked version of tobacco. Strategies and possible actions are also being discussed.

1. Challenges And Strategies
For Tobacco Control
Economics of
Smokeless
Tobacco
Products

2. Smokeless Tobacco?

3. Smokeless Tobacco
• Gutka
• Mawa
• Paan Masala
• Khaini
Smokeless tobacco is a complex chemical mixture, including not
• Snus only the components of the tobacco leaf but also chemicals
• Gul added during the manufacturing process. Smokeless tobacco
contains the addictive chemical nicotine and more than 20
• Bajjar cancer-causing chemicals, including the potent tobacco-specific
• Dantmanjan nitrosamines. The National Toxicology Program of the National
Institutes of Health (USA) has concluded that oral use of
• Other Chewing smokeless tobacco is a human carcinogen. Therefore,
Tobacco Forms smokeless tobacco is not a safe alternative to cigarettes. In fact,
smokeless tobacco use begins primarily during early
• Etc… adolescence and can lead to nicotine dependence and increased
risk of becoming a cigarette smoker.

4. India’
Global Scenario and India’s Role
• India – All Forms
• Sweden - Snus
• Norway – Snus
• USA/ Canada – Growing markets
• Small consumption in other parts of the world

5. Prevalence of Smokeless
Tobacco - Canada
Canada

6. India- Consumption Pattern
India Overall Figures:-
Above 10 Yrs who chew tobacco
Rural – 19.3 (M) 9.3 (F)
NSSO – 15
Urban – 9.9 (M) 4.3 (F) years back
(93-94)
Above 15 Yrs who chew tobacco
Rural – 31.3 (M) 13.8 (F) NFHS – 11
Urban – 20.8 (M) 8.8 (F) years back
(98-99)
NFHS-2 (IIPS – 2000 data on 30+)
Men: 35.4% Females: 18.2%

7. Prevalence
• Youth Consumption of smokeless form of
tobacco (GYTS) – 14.6%
State-level prevalence :: Example (2003)
– Delhi: 13.1(M) --- 2.5 (F)
– Rajastan: 19 (M) --- 3.8 (F)
– M.P: 40.3 (M) --- 14.4 (F)
– Bihar: 51.8 (M) --- 6.7 (F)
– Mizoram: 60.2 (M) --- 60.7 (F)
– Maharashtra: 34 (M) --- 18 (F)
– Tamil Nadu: 12.9 (M) --- 10.7 (F)

8. Exports - Production
Smokeless tobacco exports:
Approx: 252 Crores of Value
Smokeless tobacco
Production:
Nearly 60% of all tobacco is
smokeless. India produced a
total of 725 million Kg of
tobacco last year.

9. Export of Smokeless Tobacco
2009

10. Benefit to the farmer?
Farmers
hardly gets
and benefit or
any kind of
livelihood
support from
tobacco
cultivation.
Less than 1$ a Kg
Farmer get just around
half of it

11. How is India doing otherwise?
Economic Report for 2008-09 mentioned that
both tobacco and alcohol are doing exceptionally
well;
Industrial Growth by Industrial Groups figures show that Beverages and
Tobacco grew from 12% in 2007-08 to 15.5% [Weight 3]
“8.24: The IIP data indicate that the beverage and tobacco group recorded
the highest growth (15.6%) among all two digit industrial groups during
2008-09; that too on top of a strong base. Among the industries subsumed
under this product group, cigarette production marginally declined
during 2008-09…” [Page: 205-6: Economic Survey 2008-09)
Among tobacco products, the growth came from
Smokeless and Bidi sector

12. Revenue – Taxation Model
Chewing Tobacco and Unmanufactured Tobacco Packing
Machines (Capacity Determination and Collection of Duty)
Rules, 2010 (Amendment dated April 13, 2010)
Useless rules
and
impractical
collection
method.
Encourages
cheap tobacco

13. Faulty Taxation Model for
Public Health Objectives
• Central Excise Notification No 16/2010, Rate of excise duty
leviable under Section 3A of the Central Excise Act on chewing
tobacco and branded unmanufactured tobacco (Feb 27, 2010)
Sell
Cheap Such kind of taxation
– Pay harms the poor more than
less
the rich. Encourages
consumption of cheaply
priced tobacco and
defeats the public health
policies on tobacco
control.

14. Opposite Directions
• Tobacco Board of India

15. Why Smokeless is Increasing?
• Increasing Market – Wide Segment
• Less Restriction
• Virtually No Laws
• No Liability
• Easy Availability
• Easy Transportation
• Low manufacturing Cost
• Highly Addictive – Repeat Customers
• New customers required by the tobacco industry
to replace the 5 million dying every year. The
survival of the industry depends upon this
replacement by making new set of customers
hooked to addiction (Assured repeat customers).

16. Market Scenario?
• Phillip Morris – Altria already part of the smokeless
market
• RJR aggressively promoting ‘Snus’ for a long time
now
• Imperial Tobacco also a part of the smokeless tobacco
competitor
• GPI recently is in process of launching its first
smokefree product in India. Already launched “Pan
Vilas”, and set to launch a range of chewing products
this year with an investment of up to Rs 125 crore.
• Lot of big players getting ready to launch their
smokeless products

17. Future Challenges?
Smokeless is projected as less harmful/ relatively harmless
THIS IS ABSOLUTELY INCORRECT
We in India know it very well
Philip Morris and U.S. Smokeless Tobacco Co., both
parts of the Altria Group Inc., wrote to the FDA (In
January 2010) suggesting that tobacco products be
ranked on their harmfulness to health. This would
most likely result in smokeless tobacco products being
ranked as markedly less harmful than cigarettes.
Philip Morris apparently claimed the plan would have
“a significant public-health benefit.”

18. Industry Strategy?
• Grab the market and make gains in a
market with no regulations and laws.
• Take advantage of low production
cost, low procurement price and low
taxations
• Get as many customers, as possible,
within this decade
• To promote smokeless as less harmful;
confuse the public, divide opinion
among public health and government
agencies; and play the same tricks as
(they did) with Cigarettes

19. How to Tackle Them?
• Advocate for proper legislation – important
to bring all smokeless form within the scope
of law. Important to have watertight
regulations and firm policies. MoH has to play
a bigger role. Role of Ministry of Commerce
has to be transferred to MoH or another
agency.
• Smokless has to be stopped completely
• Complete prohibition on use of smokeless
tobacco products
• In the meantime – enhanced taxes and
rationalization of duties

20. What needs to be Done
Urgently?
I :- Move for State Government ban on use of smokeless tobacco. Ensure
that the intent of the Food Safety Act 2005 (to keep tobacco out of
the definition of Food) is achieved; and it is treated as an adulterant.
II:- Advocate with the Union Government to have the tobacco board
policy in unison with the Ministry of Health objectives
III:- Work to make the Union Government completely prohibit chewing
tobacco
IV:- Target ‘Areca Nut’ too. Isolated success is less likely to come.
V: Taxation :: Intermediately – Ensure there is no smokeless tobacco
variant in less than Rs. 10 a pouch category (Within next 3 years).
Taxation right from cultivation, to auction, to production, to
distribution has to be tightened (and recovered). So that there is no
cheap variant left. Increase in cost and taxation is not going to have
the same relationship; as that of cigarettes. The price is too low, and
to achieve a dip in sale/ consumption as a result of price increase, the
price has to be increased many folds.

21. Thank You
Questions
&
Answers