Kerala: Sharp dip in tobacco sales seen

KOCHI: The anti-tobacco activists are relieved over the new GST regime as the sale of tobacco products in the state is witnessing a downward trend.  Traders admit that the supply and sales have dipped due to the confusion over pricing. However, a section of traders observes that the tobacco industry, irrespective of the tax rate, would have a neutral effect due to the implementation of GST. “Tobacco products are not available as the wholesalers and market dealers are not supplying them due to uncertainties over pricing.  The daily average sales in small shops in the city declined from Rs. 8000 to Rs 2,000 after GST implementation. Unavailability of the products is the major problem,” said Jose Pallipadan, a trader at  Edappally.

The GST stipulates 28 per cent tax with an additional cess up to 21 per cent for cigarettes and tobacco products. Meanwhile, tobacco wholesalers are apprehensive  of  the uncertainties over GST implementation. “Tobacco industry, especially small-scale companies, is in a crisis due to the smoking ban and intensive anti-tobacco campaigns. Only one or two big players are making good revenue. Now, with the price increase, the consumption will further fall,” said a spokesperson of Golden Tobacco Limited.

“No stock has been sent from the manufacturing unit at Baroda after July 1 and we are not supplying the existing stock to market dealers due to doubts over billing,”  he added. However, doctors and anti-tobacco activists feel that the sharp dip in sales caused by supply reduction won’t last in the current rate. “As per the World Bank statistics, there will be 4 to 8 per cent decrease in tobacco consumption when the price increases by 10 per cent. Based on this, the GST will  bring down the consumption. While the occasional users will quit, the addicts will either switch to cheaper varieties or  reduce the frequency of use,” said Dr. A.S Pradeep Kumar, research officer at Achutha Menon Centre for Health Science Studies.