India is a country that values traditional values and is at odds with tobacco products. The Indian tobacco industry has faced opposition from the government, non-governmental organizations, and lobbies. The use of tobacco products is on the rise in India due to improper bans and the lack of awareness of health hazards. The cost of campaigns against the use of tobacco products has put a strain on the Indian economy and put people out of jobs.

India is the second-largest producer and third-largest exporter of tobacco in the world. The tobacco industry employs over 46 million people. The evolving facilities provided by the Tobacco Board of India make it easy for manufacturers to export their products at competitive rates. The tobacco industry has had a bumper year, with exports totaling INR 60.84 Bn for the Financial Year 2018. In this article, we will throw light on the market of Tobacco in India and tobacco exporters in India. So, let’s find out more!

Segment-wise Market insights:

In India, tobacco is harvested in two forms – both cigarette and non-cigarette. In 2017-2018, non-cigarette had a 69% market share. While there has been a decrease in the global manufacture of cigarettes thanks to marketing reasons, many still smoke them worldwide.

The market share in the tobacco industry was 11% for khaini and cigarettes combined, while 8% belonged to beedis. Smoking and other tobacco products are popular in India, but there needs to be greater awareness of the risks.

Legally sold cigarettes make up 10% of the overall market and generate 86% of revenue. The use of smokeless tobacco is the highest in India, but it still makes up a small percentage of overall earnings from legal cigarettes. This is because tobacco consumption in India is widespread, especially among people who have never been addicted to any substance before.

Adding Value to the Rural Economy

There are several tobacco exporters in India. Tobacco is grown by small, marginal farmers in India on non-irrigated soil and land holdings of less than 2.5 hectares. Small and marginal stakeholders in the tobacco industry in India are 400,000 who grow cigarette tobacco and around 600,000 who grow non-cigarette tobacco. Other crops don’t offer the same attractive return for farmers of a particular region.

Cigarette tobaccos provide more returns than non-cigarette tobacco and account for about 85% of all tobacco varieties. The cigarettes sold at auction are subject to a minimum guaranteed price (MGP), and the government mainly sets the MGP. As a result, tobacco farmers who produce high-quality tobacco will have higher returns with a guaranteed minimum.

Farmers must grow tobacco to produce high-quality, fully-grown waves of tobacco. Farmers need to ensure that they have enough money from producing these crops to not overproduce and regret it later when the market becomes saturated with their product.

Fluctuations in supply can greatly impact the price of the product depending on how many others. As a result, Indian tobacco farmers tend to favor the domestic market and convert their exports into domestic products.

Factors driving the tobacco market:

  • Tobacco has become a crucial part of Indian culture, particularly in the east and north. A relatively higher income growth compensates for the increasing price of cigarettes, leading to increased consumption. Factors like peer pressure and societal attitudes help to drive the demand for cigarettes. Keep an eye on these trends to grow your business.
  • The Tobacco Board has helped Indian tobacco companies upgrade to cutting-edge threshing plants and factories that re-dry tobacco. Tobacco growers primarily export their tobacco to different countries. This keeps local facilities busy and increases the demand for different infrastructure expansions.

Market challenges:

  • India’s cigarette taxes are among the highest in the world because of a 64% excise duty, 28% GST, and 5% cess. As a result, people who can’t afford cigarettes can buy beedi and smokeless tobacco less expensive. So, the total market for tobacco products remains stagnant or even decreases.
  • The Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act of 2003 (COTPA, 2003) imposes a blanket ban on tobacco advertising. Tobacco ads are completely banned. This web shows how companies use hidden ads to indirectly promote their product, which is against the law. Many brands are finding it hard to promote their products, limiting the growth of the domestic market.

Final thoughts

India is a large market for tobacco export. There are several tobacco exporters in India, one being Kunal International India. If you are looking for a tobacco supplier and exporter, contact Kunal International. Contact them to know more!