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Illegal cigarette market growing in Punjab

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Chandigarh, Dec 24, 2020-
Punjab has been emerging as a hub of illegal sale of imported cigarettes and a crucial route to neighbouring Jammu and Kashmir and Himachal Pradesh, posing a threat to the health of smokers too who are getting hooked to the cheap quality of international brands sans health warnings, trade insiders said on Thursday.

A major tax inspection by the Excise and Taxation Department on two prominent cigarette distributors of the Amritsar city was conducted on Wednesday.

Official sources told it seems the tax evasion by both the distributors is of nearly Rs 50 lakh that comprises banned tobacco products, lesser known Indian brands and a large stock of the imported ones.

Trade insiders believe besides Amritsar, Chandigarh, Ludhiana and Jalandhar are the main transit points of the imported and cheap Indian brand of cigarettes that are routed from Delhi.

“Delhi Customs (Preventive) conducted multiple searches, including the warehouses of logistics service providers. Seized 19.3 lakh foreign cigarettes valued at Rs 2.35 crore. Four arrests so far. Investigation is on,” Customs (Preventive) Delhi informed in a tweet on Wednesday.

According to the officials, the seized cigarettes were smuggled from countries like China, Malaysia, South Korea and Indonesia to evade taxes and sell them in Delhi and other major cities.

“When compared to the Indian brands, consumers prefer to buy foreign brands due to the international quality, catchy labels and nicely packed,” an investigator told.

Whereas cigarettes produced and packed in India have to adhere to specified health warnings, both in pictorial and text formats, to discourage the smokers.

Trade insiders say Punjab alone has an annual legal market of 120 million cigarettes and the grey market accounts for 20-30 per cent.

Chandigarh and Panchkula cities have an annual legal market of 20 million and 10 million cigarettes respectively, and the illegal market has a share of 15-20 per cent.

While Kashmir has an annual legal market of 300 million cigarettes, the grey market has a share of seven-eight per cent, comparatively less than Punjab’s share.

Himachal’s tourist destinations Shimla and Manali have the annual illegal market of one million cigarettes each. They have a legal market of 10 million and five million cigarettes respectively.

Most of the illegal cigarette brands attract the retailers as they are available at a significantly lower price than the legal cigarettes. They are sold in the market at one fifth the price of the legal product, said the investigator.

Take the case of an imported brand. A pack of 20 cigarettes costs Rs 20-30 to a retailer, who is selling at a cost of Rs 100. While an Indian brand cost between Rs 250 and Rs 300 with a profit margin of approximately Rs 5.

A spokesperson for the Punjab government said 21,446 fines under the Cigarettes and Other Tobacco Products Act or COTPA were imposed in 2019-20 and the maximum fines were against selling cigarettes without pictorial warning. (Agency)

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