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Cigarette makers shut their factories over pictorial warning rules

Cigarette makers have shut their factories from Friday due to ambiguity over new warning rules on packs, a leading industry lobby group said on Friday.

business Updated: Apr 01, 2016 19:55 IST
Cigarette makers
The Tobacco Institute of India, which says its members account for 98% of local sales of duty-paid cigarettes, said in a statement it estimated the production halt would cause the industry a loss of Rs 350 crore rupees a day.(AP Photo)

While the new norm to put larger pictorial warnings on tobacco items was ready to be doled out, tobacco majors including ITC Ltd and Godfrey Phillips India Ltd have threatened the government by announcing their decision to shut all cigarette factories with effect from April 1.

Cigarette industry body Tobacco Institute of India (TII), on behalf of its members including ITC Ltd, Godfrey Phillips and VST Industries, said: “Members of TII, who account for more than 98% of the country’s domestic sales of duty paid cigarettes in India, have unanimously decided to shut all their cigarette factories with effect from April 1, 2016.” “Owing to ambiguity on the policy related to revision of graphic health warnings on tobacco product packs, the members are unable to continue manufacturing cigarettes from April 1, 2016.”

Syed Mahmood Ahmad, director, TII, said: “The Indian tobacco industry has written to Ministry of Health & Family Welfare on 15th March, 2016 seeking clarification on the matter.”

Fearing potential violation of rules by continuing production, TII members have decided to shut their factories. “The move will result in an estimated loss of Rs 350 crore per day in production turnover for the Indian tobacco industry.”

The rule, under which all tobacco manufactured products will carry larger pictorial health warnings, covering 85% of the packaging space, was to begin from April 1. However, companies are against the norm and believe that the existing pictorial warnings at 40% of the front of the pack are adequate to warn and caution consumers. “The extreme 85% warnings will promote illegal cigarette trade and adversely affect the livelihood of 45.7 million people dependent on tobacco which included farmers, labour, workers, trade and others,” TII said.

A mail sent to ITC and Godfrey Phillips requesting comments on the issue did not fetch any response.

The legal Indian cigarette industry has been facing a continuous drop in demand because of high taxation and the growth of duty evaded illegal cigarettes that do not carry pictorial warnings, thereby creating the impression that they are safer for consumers, TII said. As per industry estimates, illegal cigarettes account for one-fifth of the total cigarette industry resulting in annual revenue loss of Rs 9,000 crore to the national exchequer.

As per WHO estimates, in India, nearly a million deaths occur annually due to tobacco and the economic burden attributable every year to tobacco-related diseases is about Rs1,04, 500 crore. India is ranked 136 of 198 countries according to the international status report on Cigarette Package Health Warnings, 2014 and countries ranked after 143 do not display pictorial health warnings at all.

The top three cigarette consuming countries -- the US, China and Japan -- that account for 51% of global cigarette consumption have only text-based warnings (about 30% in size) and have not adopted pictorial warnings, as per The Federation of All India Farmer Associations (FAIFA), a non-profit organisation representing the causes of tobacco growers in India.

“Anything that is manufactures from today onwards will have pictorial warnings that cover 85% of tobacco packs, including bidis. Tobacco products currently available in the market will remain till the stocks are used up and replaced by the new packs,” said CK Mishra, additional secretary, ministry of health.

As per the government, tobacco products, if manufactured or sold without 85% pictorial health warnings, can be seized and confiscated, with second and subsequent offences leading to enhanced fines and imprisonment, which can go up to 10 years.

The graphic warnings, which show close up shots of mouth cancer, has to be replaced by shots of throat cancer in one year. The tobacco industry gets two months as grace for the second round of warnings after 12 months to clear their stocks from the shelf and replace it with the packs with the second set of warnings.