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Indian Tobacco
Tobacco was initially grown in the Deccan region (South Central India), during 1605 and spread to other parts. The Virginia variety of tobacco was introduced in India Andhra Pradesh in 1920 by the British officers of the Indian Leaf Tobacco development company. Sir Forbes Watson’s cultivation and preparation of tobacco in India (1871), said to be one of the earliest publications on tobacco tell us more about Indian tobacco.
Although tobacco was grown in many parts of India during the 1950s, the best quality crop was grown in Bihar, West Bengal, Tamil Nadu, Karnataka, Maharashtra, Punjab and Andhra Pradesh. Cultivation of Flue-Cured Virginia (FCV) tobacco spread to Tamil Nadu (1957-1958), Maharashtra (1961-1962) and West Bengal (1966). Till the 1960s, the cultivation of FCV tobacco was traditionally confined to the black soils in India. However, with increasing demand for light-bodied leaves and low nicotine/tar content, it’s cultivation was extended to Karnataka’s light soils.
› Types of tobacco
Flue-Cured Virginia (FCV), bidi, hookag, chewing, cigar, wrapper, cheroot, burley, oriental, HDBRG, lanka, naku etc are the different types of tobacco grown in the country. FCV and Burley tobaccos are the primary ingredient in the manufacture of cigarettes. It is mainly cultivated in Andhra Pradesh and Karnataka.
› Production
Indian tobacco occupies 10% of the area and 9% of the total production. With annual production of 700 million kg, India ranked 3rd in the world after China and Brazil.
In India Tobacco also called Golden Leaf is one of the important commercial crops of India and being so it is vital to the economy. It provides employment directly and indirectly to 36 millions of people and contributes as much as Rs.10271.55 crores (as on 2007-08) as excise duty and Rs.2022.78 crores in terms of foreign exchange to the national exchequer.
› Consumption
India is one of the biggest tobacco markets in the world, ranking third in total tobacco consumption behind one the markets of China and United states. However the per capita consumption in the country is 0.9kg compare to the world average of 1.8kg. Tobacco usage in India is contrary to world trends since chewing tobacco and beedi are the dominant forms of tobacco consumption, whereas internationally, cigarette is the dominant form of tobacco use.
› Facilitators
The Tobacco Board and agricultural research institutes are located in different parts of India are facilitating the sustained production of different types of tobacco and supplies tobacco seeds. In addition, research institutes affiliated to the Indian Council of Agricultural Research (ICAR) and universities are undertaking research on new and improved varieties. The Tobacco Board is promoting the production of FCV tobacco through regulated cultivation, processing and marketing of tobacco. Subsidies are provided for the purchase of coal, fertilizers, sprinkler sets, installing barn insulation, etc.
However, it may be stated here that the developments in tobacco research may help
increase the yield, quality and flavour of tobacco, but not the area under tobacco cultivation. Further scope for increasing this area in India is limited because of the peculiar soil conditions and climate required for cultivating tobacco.
› Export
In 1985, India exported unmanufactured tobacco products to nearly 50 countries. Currently, India has tobacco trade with more than 100 countries. It appears that exports have determined the production of FCV tobacco in India. In 2009 Tobacco contributes around Rs 1,713 crores towards foreign exchange accounting for 4% Indian total agri-exports and Rs 9,100 crores to excise revenue which is more than 10% of total excise revenue
Although India is one of the major exporters of unmanufactured tobacco, it has yet to make its presence felt in the export market for cigarettes. From the data on tobacco exports, it is evident that India is known more for its unmanufactured tobacco than for the value-added manufactured products of tobacco.
› Employment
The structure of employment in the Indian tobacco industry largely reflects the structure of the consumer market for tobacco products in India. Specifically, the effect of the production of beedis dominates employment opportunities
within the manufacturing sector of the domestic industry as this is a highly labour-intensive activity and involves much less sophisticated manufacturing techniques compared to those employed by cigarette manufacturers. The vast majority of positions in the tobacco industry are available either on a part-time or seasonal basis. The main activities in which there is full-time employment are leaf processing, cigarette manufacturing, distribution and retailing. Of course, people involved with the distribution and retailing of tobacco products will derive only part of their livelihoods from the sale of tobacco products.
Recent survey revleas about 6 million farmer and 20 millions farm labour are engaged in tobacco farming spread over 15 states. Biding rolling provides employment to 4.4 million people in addition to 2.2 million tribals involved in tendu leaf collection. Nearly 4 million people are engaged in the trade and related activities. The main beneficiaries are the small and marginal farmers, rural women and tribal youth.
› Strengths
Indian tobacco has an edge over the leading tobacco producing countries like USA, Brazil, Zimbabwe and Malawi in terms of low production cost, average farm price, average export price, low conversion cost of tobacco into cigarettes, low ocean freights from India and availability of processed quality tobacco in threshed lamina form at export price well below the farm prices in USA. Hence, Indian tobacco is considered as ‘value for money’. Some of the other positive and significant features of Indian tobacco are: lower levels of heavy metals like cadmium and lead, tobacco specific nitrosamines, radioactive Polonium 210 content and pesticide residues, free from blue mold disease, a quarantine problem compared to other tobacco producing countries.
India is endowed with favourable climate and vast arable land available and by virtue of these features, the country has the potential to produce FCV tobacco of different styles, ranging from the coloury neutral filler to flavourful leaf catering to the requirements of different importing countries. Now, customer preference is increasing for naturally grown neutral fillers with low to medium nicotine, suitable for easy blending and the light soil tobacco, particularly from Karnataka is meeting these requirements.
› Weaknesses
In India, mostly filler to semi-flavourful type of tobacco is produced and only low proportion of flavourful tobacco is available for export which are considered as the important factors for low export earnings. However, internationally there is great demand for flavourful tobacco. Due to non-availability of export surpluses of quality FCV, oriental, burley and cigar tobaccos in large quantities, inadequate
market intelligence and meagre exports of value added products, the full export potential is not being utilized.
› Opportunities
In recent years, there is considerable drop in tobacco production in USA and Zimbabwe, due to various reasons. The multi-nationals are shifting to sources of quality FCV tobacco at a competitive price. Availability of suitable areas for producing semi-flavourful and flavourful tobaccos and the possibility for improving filler tobacco to neutral filler and superior quality filler provide excellent opportunity for India. Now, Iraq, Egypt, Algeria, Nepal, Singapore and Bangladesh are promising markets for Indian FCV tobacco and small markets like France, Portugal, Spain, Australia, Tunisia, Morocco and Finland could become potential markets in future. Also, there is wide scope for export of value-added tobacco products like cigarettes and scented bidis. With the identification of several tobacco phytochemicals beneficial to mankind, exploitation of tobacco for alternative uses is another promising opportunity.
Threats: Pressure from anti-tobacco lobby and stringent regulations being enforced by governments in different countries, including India, are posing a major threat to tobacco production. Environmentalists’ campaign on denudation of forests regarding use of firewood for tobacco curing due to shortage of coal is a concern.
Increase in cost of production day-by-day and competition from China due to its low cost of production are likely to influence tobacco exports from the country. Tobacco cultivation may be forced out of traditional areas due to high value competitive crops and high labour cost.
Large scale of smuggling of cigarettes into the country is a major problem faced by the Indian cigarette industry.