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State must end ties with tobacco companies

Monday, August 11, 2014

If the new government is serious about its anti-tobacco stand, it should pull out all stakes from tobacco-manufacturing companies, writes Gajanan Khergamker

The new government at the Centre displayed its strong ‘anti-tobacco stand’ by increasing the excise duties on cigarettes and other tobacco products earlier in budget.

However, not many are aware that the top six public shareholders of ITC are government-owned insurance companies that include Life Insurance Corporation of India, New India Insurance, General Insurance Corporation of India, the Oriental Insurance Company, and National Insurance Company Limited.

In July 2014, in stark contrast to the government’s anti-tobacco move, Life Insurance Corporation (LIC) increased its stake in ITC to 14.42 per cent by buying 4.39 crore shares.

Government is now the biggest shareholder in ITC
And, with the ‘recent purchase,’ the government is now the largest single shareholder in ITC - accounting for a 32.51 per cent of the shares.

The government, in its new budget, announced heavier taxes on tobacco and tobacco product to help lower consumption of tobacco in the country.
Based on the new budget, cigarette prices are going to rise by 12 per cent to 14 per cent for regular length cigarettes whose excise duty has been increased by 11-21 per cent, while for smaller size cigarettes (64 mm) prices will rise from Rs two per stick to Rs 2.5 to Rs 3 per cigarette due to a 72 per cent increase in duties.

Excise on tobacco products increased in budget
The budget registered an increase in basic excise duty from 12 per cent to 16 per cent on pan masala, from 50 per cent to 55 per cent on unmanufactured tobacco and from 60 per cent to 70 per cent on zarda-scented tobacco, gutkha and chewing tobacco.

US jury award $23.6 billion compensation to widow
Last month, in a landmark judgement, a US jury favoured a widow who had filed a law suit against America’s second largest tobacco company RJ Reynolds.
In an award, the jury directed RJ Reynolds Company to pay a $23.6 billion compensation widow.

Cynthia Robinson, the widow, had filed a suit in 2008 against RJ Reynolds seeking compensation for her husband’s death in 1996.

The company was accused of being ‘negligent in informing consumers of the addictive dangers of tobacco.’

And, it was claimed that the negligence led to Michael Johnson Sr. (Robinson’s husband) contracting lung cancer from smoking cigarettes after becoming ‘addicted’ and failing to quit after many attempts to stop smoking.

Tobacco consumption causes 1.5 million deaths annually
This brings the sore subject of death caused by tobacco consumption back in India.

An estimated 1.5 million people die annually because of smoking. A recent report suggests, India is the world’s second largest tobacco market, with 16 per cent of its population using cigarettes.

There are three major tobacco companies in India, partially owned by international companies, which account for a majority of these sales.

ITC is the biggest player in Indian tobacco industry
ITC Limited (32 per cent owned by British American Tobacco (BAT)) controls 80 per cent of the market, Godfrey Phillips India (GPI, 25 per cent owned by Philip Morris International) 12 per cent and Vazir Sultan Tobacco (VST, 32 per cent owned by BAT) controls the remaining 8 per cent of the market.

Since May 31st 2008, placing a warning sign on the cigarette became a law.

According to The Cigarette and Other Tobacco Products (Packaging and Labelling) Rules 2008, all tobacco products are required to display graphic pictures, such as pictures of infected lungs, and text ‘Smoking Kills’ or ‘Tobacco Kills’ in English, covering at least 40 per cent of the front of the pack, and retailers must put the cigarette packs in such a way that the pictures on pack are clearly visible.

Before this, cigarette packs in India were required to carry a written warning on the front of the packet with the text ‘Cigarette Smoking in injurious to health’ in English and paan, gutkha and tobacco products carried the warning ‘Tobacco is injurious to health’ in both Hindi and English.

Indian children have little inkling of health warnings
An international study conducted, earlier this year, revealed that Indian children had little to no understanding of health warnings or graphic representations printed on tobacco products.

Researchers conducted one-on-one interviews with urban and rural five and six year olds from Brazil, China, India, Nigeria, Pakistan, and Russia.

According to the research, Indian children had the lowest levels of understanding of graphic representations or the warning messages on tobacco products.
Researchers conducted interview with in a total of 2,423 children and, of these, 62 per cent were unaware of the health warnings currently featured on cigarette packages, with the lowest levels of awareness in India and the highest levels in Brazil.

When shown the messages, the same percentage of participating children (62 per cent) showed no level of message understanding.

Man demanded compensation from ITC after losing voice
In 2009, Mumbai-based Deepak Kumar dragged tobacco giant ITC to consumer court and demanded compensation from the company after he lost his voice owing to cancer of the larynx, he claimed, caused due to smoking ITC cigarettes.

A three-member bench headed by Justice S B Mhase along with S R Khanzode and I D Yengal dismissed the complaint filed by Kumar under the Consumer Protection Act (CPA) saying that there was merit in the submissions made by the opponent (ITC). At the pervious hearing, the counsel arguing on behalf of ITC said that Kumar has no ‘proof of sale’ to establish that the cigarettes he smoked were manufactured by ITC.

Also, a complaint is maintainable under CPA only if the goods are ‘defective’ he contended.

The bench held that once Kumar stopped smoking, in April 2006, consumer-service provider relationship between him and ITC ended there.

The court ruled that Kumar ceased to be a consumer when he stopped smoking and a complaint could not be entertained two years after he stopped purchasing cigarettes.

Govt. will have to inspire confidence among people
The government’s move of increasing deterrence among tobacco and tobacco products’ consumers will never seem whole hearted as long as it does not pull out all stakes from the leading tobacco manufacturing companies.

Although ITC is not ‘just’ a tobacco manufacturing company and has proceeded to become a Fast Moving Consumer Goods (FMGC) company, it’s still a country’s biggest tobacco products’ manufacturer.

(With inputs from Prerna Pandey)

Govt needs to have a strong will to end tobacco consumption

  • Every major political party, including Congress and Bharatiya Janata Party (BJP), has accepted money from ITC, totalling at least rupees 124 million ($2.2 million) between 2005 and 2011,12–15 and several members of the ITC board of directors held or had held government office.
  • In February 1995, the parliamentary committee on subordinate legislation of the 10th Lok Sabha (the lower house of parliament) examined the regulations under the Cigarettes Regulation of Production, Supply and Distribution Act from 1975.
  • In December 1995, the committee recommended strengthening the language in the warnings, adding pictures, and extending the warnings to bidis and smokeless tobacco. Because some committee members were industry representatives and did not sign the report it was not officially accepted by the government. The Central Ministry of Health also constituted an expert committee on the economics of tobacco use.
  • In June 2006, the Shimla High Court ordered the government to enforce rules on packaging and labelling of tobacco products in compliance with Cigarettes and Other Tobacco Products Act (COTPA) and Framework Convention on Tobacco Control (FCTC) guidelines by February 2008. In July, The Ministry of Health and Family Welfare (MoHFW) released a set of field tested Graphic Health warning labels (GHWLs) to be used on cigarette, bidi and smokeless tobacco packages for public review.
  • The MoHFW first proposed the skull and crossbones in the late 1980s, but it was not implemented due to strong industry opposition. The cigarette and bidi industries continued to lobby heavily against the GHWLs,
  • In January 2007, the MoHFW delayed implementation until 1 June 2007, and in February it requested that the prime minister create a task force to further study the issue. In response, the prime minister created a task force called the Group of Ministers (GOM) to study GHWLs and make recommendations.
  • A survey of more than a thousand people showed that the skull and crossbones symbol was understood to indicate danger by illiterate rural populations and that more than ninety per cent of Muslims and Hindus agreed that the symbol did not offend their religious sensibilities.
    Sourced from

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