Introduction
India is the second largest tobacco producer behind China. The country has around 0.45 million hectares of area under tobacco cultivation. Globally, it accounts for 9% of the total tobacco production.
India produces various types of tobacco including flue-cured tobacco, country tobacco, burley tobacco, bidi tobacco, rustica tobacco and chewing tobacco. The average production for the last five years for tobacco crops is around 800 million kg.
The major tobacco manufacturing states in India are Gujarat, Andhra Pradesh, Uttar Pradesh, Karnataka, West Bengal, Telangana and Bihar. Out of these Andhra Pradesh, Karnataka and Gujarat account for around 45%, 26% and 14% of the total production of the country respectively. Uttar Pradesh accounts for around 5% and the rest of the state’s account for about 2-3% of the country’s total tobacco production.
Tobacco Export Trend
India is the second largest exporter of tobacco behind Brazil. It exports various types of tobacco and tobacco products such as stripped, wholly stemmed, cigar cheroots, smoking tobacco, homogenized, flue-cured, sun-cured, extract and essence, etc.
Between April 2021-February 2022, India exported tobacco and tobacco products worth US$ 838.80 million.
In February 2022, the export of tobacco from India stood at US$ 78 million, a 12.78% rise from the same period of 2021. Also, the month-on-month growth of exports for February 2022 was 20%.
From November 2021 to February 2022, tobacco exports in India grew at a CAGR of 7.6%.
Major Markets
India exports tobacco mainly to Belgium, the Philippines, Egypt, Arab Rep., Germany, Nepal, the US and Turkey. Out of these countries, Belgium is the biggest importer of tobacco at around 14% of the total exports from India. Egypt, Arab Rep. and the Philippines are one of the largest tobacco export destinations for India importing around 13% and 12% of the total. The country also exports to Indonesia, France, UAE, Russia, Korea, Sri Lanka, Malaysia, Venezuela, Ethiopia and Nigeria.
Government Initiatives
In 2022, the government of India approved the extension of the Interest Equalization Scheme (IES) till 2024. The rates for IES have been revised as 3% for MSMEs (tobacco products have MSME registration) and 2% for manufacturers and merchant exporters.
Governing Bodies
Tobacco Board
The Tobacco Board was formed in 1976 and is headquartered in Andhra Pradesh. The board is a facilitator to the tobacco growers, traders and exporters. The functions of the board include promotion of all categories of tobacco and allied products, overseeing the production and distribution of the products for domestic as well as exports and regulating the Flue-cured Virginia (FCV) tobacco. Some of the other roles of the Tobacco board are advising the central government, propagating information, sponsoring and encouraging scientific and technological research related to tobacco promotion.
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