Cigarette Vs gutkha: The ugly fight is out in the open

Is a lobby working against gutkha? Manufacturers of gutkha think so.

A screaming advertisement in _The Times of India_today openly alleges that a cigarette lobby is behind the step-motherly treatment meted out to the poor cousin.

The trigger for the advertisement is the ban on gutkha imposed by 14 states under the Food Safety and Standards Regulations (2011) that bans food articles containing tobacco.

The ad has listed out the differences between cigarettes and gutkha, clearly favouring the latter to the former.

And interestingly, the disclaimer says the ad is issued in “public interest” and not “meant to promote tobacco or any other tobacco products”.

If this is not promoting gutkha, what else is?

[caption id=“attachment_477736” align=“alignleft” width=“320”] The ad has listed out the differences between cigarettes and gutkha, clearly favouring the latter to the former. Reuters[/caption]

The gutkha lobby’s heart burn and barb against the cigarette lobby is understandable. Soon after the ban, various brokerage houses came out with research reports explaining how the move will help cigarette companies.

“We see this is a positive for cigarette companies, considering the hike in excise and VAT rates in recent central and state budgets on bidi and gutkha. Cigarette consumes only 15% of the tobacco in India which indicates long term growth opportunity,” a note from Anandrathi said on 11 September.

The note was circulated soon after Gujarat and Delhi announced their decisions to ban gutkha.

“We expect a positive impact of these announcements on all cigarette stocks-ITC, Godfrey Philips and VST Industries,” it added, insisting that restrictions on smokeless tobacco is good for cigarettes.

Another report from Edelweiss put the loss from the ban at just Rs 2000 crore.

“We do not expect the ban on gutka to be extended to cigarettes (a) as it is not classified as a food item, (b) it is a major source of revenue for the government and (c) it is not banned anywhere else in the world,” a Times of India report quoted the brokerage.

According to the report ITC and VST have launched cigarettes at lower price points of Rs 2 per stick to cash in on the emerging demand from the new customer base.

It is sure that the cigarette companies will benefit. With tobacco facing a global backlash, tough policy and taxation are hanging on them like the sword of Democles.

Shares of ITC, Godfrey Philips and VST Industries have risen 3-10 percent from 11 September to 1 October.

However, whether a lobby actually worked against gutkha cannot be established easily.

But more details are likely to surface once the cigarette companies pick up the gauntlet and join the public washing of dirty linen.

However, the spat is bringing into focus the lack of clarity in government policy on tobacco.

What good is banning tobacco consumption going to do if tobacco cultivation is left untouched?

A Tobacco Atlas published by the World Lung Foundation in March 2012 puts India’s tobacco acreage at 390,000 hectares.

While banning tobacco products, the government will also have to find ways to give an alternative livelihood for the farmers engaged in tobacco cultivation.