By Prashant Kumar
Any government initiative to curb tobacco consumption through any medium, whether it be pictorial and textual warning, health awareness campaigns, taxation and price increases, is not only commendable but necessary. This article does not condone or encourage the use of tobacco or diminish the efforts of both Central and State governments in their endeavour to reduce consequent negative health aspects of this consumption. However, the aim of this article is to question some of the illiterate economic policies that are being forcibly instituted on tobacco products, for example the recent decision to implement an 85% pictorial warning on all such products.
In a few weeks, the Karnataka High Court will decide upon the Supreme court’s orders of instituting an 85% pictorial warning on all packaging of tobacco products. The previous decision was met with heavy opposition from the tobacco industry, ranging from the tobacco farmers protesting on the eventual loss in livelihood to industrial leaders like Godfrey Philips and ITC vocalizing the apparent threat of international players coming into the market both legally and illicitly. On the other hand, NGOs, health experts and some ministerials have been adamant that this is perhaps one of the more impactful measures by the government on tangibly reducing tobacco consumption in India.
This warning itself is not a new strategy. Countries around the world, such as Brazil, Australia, Thailand and others have implemented similar strategies for their own tobacco products. But what experts and decision-makers are failing to understand, is that at the simplest level, tobacco consumption in India is far different from consumption in almost any other country. While in most countries cigarettes are the primary form of tobacco consumption and regulations are created to curb this product, India offers alternatives such as beedi, khaini and gutka. In fact, out of the total tobacco consumption pie, cigarette smoking only constitutes a mere 15%.
The biggest problem in instituting this new 85% is in the fact that the packaging itself, apart from cigarettes and cigars, is very informal. Beedi is packaged in recycled newspapers, in a conical shape that prohibits an undistorted image. Gutka and Khaini are in satchels so small that even an 85 percent pictorial warning is illegible. Though the packaging and labelling rules of the Cigarettes and other Tobacco Products Amendment of 2014 mandates a clear textual warning in English, Hindi and the local language, the level of informal packaging just doesn’t allow clear visibility. In fact, in many cases all three textual warning parameters are hardly ever complied with.
The second problem is that while industry experts argue that there is a direct linkage between pictorial warning and illicit trade, even though a causal relationship between the two is yet to be proven, there is far more proof to support a causal correlation between high and arbitrary taxation policies and illicit trade than for a relationship with warnings. Having said that, India is the fifth largest consumer of illicit cigarettes in the world and the average 31 percent annual increase in illicit tobacco in Indian markets since the implementation of the 40% pictorial warning instituted in 2007 may be illustrative of a possible relationship. Illicit cigarettes are easy to spot and have been proven to be more attractive for consumers, especially new and potential smokers. Given that they do not have to comply with Indian regulations, not only are they presented in more appealing packaging, they are often sold cheaper than Indian products, thus circumventing taxation policies as well. According to the Parliamentary Action Committee report on packaging and labelling, illicit trade has cost the exchequer close to Rs 9000 crores in the last few years alone. For example, illicit trade of flavoured cigarettes and flavoured tobacco products (which Indian companies do not produce) is the primary reason for the exponential increase in women smokers in the country, rising from 5.3 million in 1980 to 12.7 million in 2012.
The problem with illicit trade extends further down the entire tobacco supply chain and has the potential of affecting the 45.7 million workers employed in various aspects of the industry.
Illicit trade before the 2007 ruling was less than 1% in India but now has 21% of the market share. In 2015 alone, as per DRI sources, the government has confiscated 138.6 million sticks of smuggled cigarettes with an approximate value of Rs 151 crores. Smuggled tobacco is also causing the Tobacco Control Board (a government body that sets production levels and prices of tobacco) to reduce total production for the last couple of years, also impacting India’s position as the second largest tobacco exporter of the world.
The real impact of the pictorial warning on illicit trade will not be known until yearly sales of cigarettes can be studied post the implementation of this mandate and if a direct linkage can be found, but if there exists one, it may require some alternative and additive solutions to protect the 45.7 million workers. While there is some merit in the argument for pictorial warnings, given India’s relatively low education level, these are a suitable alternative to textual warnings given that they can reach a larger audience specifically for beedis and other smokeless tobacco. But without addressing the above mentioned concerns surrounding an 85% warning, the impact of the adopted strategy will always be limited.
There is a somewhat high chance of the decision going towards implementation of this warning, but given the inefficiencies surrounding this strategy, it would be far more prudent if the court can incorporate industry perception into their final judgement. The problem in not doing so is that both the judiciary and the government will be responsible for perpetuating the short-sighted “one size fits all” strategy the government often uses in tobacco taxation. The debate on the matter is poised to continue regardless of the upcoming decision but the need for impactful and effective regulation in the tobacco industry is undeniable. The increasing incidences of tobacco related health concerns themselves prove that this is incontestable. But, the government would be wise to choose strategies and awareness programs that can truly help the cause. Though the jury is out – both figuratively and literally- on whether pictorial warnings can be the catalyst in drastically changing tobacco consumption in India, without addressing these very serious concerns, India’s tobacco policies will continue to fall short of their desired goals.
Prashant Kumar is as Associate Fellow with the Economic and Development Programme at Observer Research Foundation.
(The views presented in this article are personal)