ban on smoking

7/31/2019 Ban on Smoking

1/15

Project Report

On

Ban on smoking in public places - Impact onTobacco Industry
http://en.wikipedia.org/wiki/File:No_Smoking.svg


2/15

Executive Summary

India, where about 240 million people use tobacco, implemented a ban on smoking in public places in

2008. Unlike efforts to outlaw public urination, clean up the streets, provide enough clean drinking

water and sanitation to its poor or improve the congested roads and trains overwhelmed with

commuters, Indias ban on smoking has, in many ways, worked. A strong commitment on behalf of the

government and non-governmental organizations as well as public awareness and public initiatives

around anti-smoking have made the ban, which carries a fine of up to 200 rupees, relatively successful,

say anti-tobacco advocates. The government, led by former Health Minister Anbumani Ramadoss,

battled the tobacco industry which sells an estimated 102 billion cigarettes in India every year and

won. The ban, unlike previous ones that had loopholes, made rules regarding where people can smoke

extremely clear. A restaurant can only have a smoking area, for example, if the section is physically

separate, follows special air pressure rules and does not serve food or drinks. Compliance with the ban is

also due to a high level of public support for smoke-free public places. Ninety-two percent of

respondents in cities across India strongly favor regulations to make public places and work places

smoke free, according to a poll published by the Institute of Public Health, Mumbai in September 2008.

Advocacy groups have found it easier to show the direct impact of second-hand smoke than of other

public health risks like spitting. Eighty-four percent of people across India said they believe second-hand

smoke is a serious health hazard.

While the enforcement of the ban is generally high, and extends to workplaces and train and bus

stations, it is far from universal. A smoker can still find public places indoors to light up, such as so-called

country liquor bars that serve cheap alcohol and in hookah lounges.

Table1: Tobacco Users Grouped By Age in India


3/15


4/15

The Indian system of tobacco ban has the following steps:

The trends of various countries where tax on cigarettes was increased as a measure to control tobacco

use shows a very marginal decline that can still be questioned as figures not showing those who quit due

to raised tax or some other events.


5/15

The performance of the Indian tobacco industry has taken a slight hit but it is too small than what was

expected. The Indian tobacco industry had imagined a considerable margin of change but it seems early.

Several tobacco companies have greatly diversified into different fields ranging from hotels, designer

clothing, development programmes, and stationery to the food business, etc. Despite all diversifications,

the cigarette brands still continue to be their main revenue generator. Whether these efforts of

diversification are plans to reduce investment in tobacco production and manufacturing are not known.

The Indian tobacco industry thus faces the following threats that together are a must to watch for

survival: Declining market; Heavy taxes and duties, Growing anti-smoking movements, Increasing rate of

smuggling of imported cigarettes, Entry of global brands, New government restrictions in order to meet

the World Health Organization guidelines (Ban on smoking in public places is the basis for this research).

The tobacco industry has proven to be somewhat more resistant to the effects of economic downturnsthan other industries, perhaps due to the nature of their products or the brand loyalties. Cost-conscious

consumers may stop smoking or downgrade to a value-priced brand during economic slumps, but most

consume the same brands at the same, or slightly lower, level. The ban on smoking in public places

dont seem to be a deterrent for the smokers or the tobacco industry when taken as a whole

nevertheless it will surely be in the favor of non-smokers who earlier were subjected to passive

smoking.

Most of the major tobacco companies posted continuous sales growth during the two quarters, April-

June and July-September 2009. The largest domestic tobacco company, ITC, with cigarette brands such

as India Kings, Classic, Gold Flake, Navy Cut, Bristol, Scissors, Capstan and Flake, registered sales growth

of over 20% in the tobacco business in both the quarters ending June and September 2009. During the

first quarter of FY10, in terms of sales, the tobacco business grew by 23%, whereas, during the second

quarter of FY10, the cigarette business went up by 21% to Rs 2199.69 crore compared to data of

previous year. Although cigarette volume consumption in India is lower than that of smokeless tobacco

and beedis, cigarettes accounted for the highest share of government revenue from tobacco taxation.

Thus, ITC, Godfrey Philips and VST Industries remained the leading companies in terms of tax revenue

because there are a large number of unorganised companies which evade paying tax on other tobacco

products, such as Chemon Group in cigars and even Dhariwal Industries Ltd, the leading company in

chewing tobacco. Smokeless tobacco and cigarettes were the biggest contributors to overall tobacco

sales in India in 2009. With these tobacco products being sold mostly in traditional stores such as paan

shops due to the large number of these outlets across the country, consumers can easily purchase


6/15

tobacco products minutes from where they live. Nonetheless, more consumers were able to find mid

and high-end cigarettes and mass cigars in modern grocery stores such as supermarkets/hypermarkets

which target middle and upper-income consumers. After the global crisis which impacted India in 2008

and 2009, the Indian government is expected to maintain the excise tax on tobacco products in the

short term in order to normalize volume demand for tobacco products, particularly cigarettes, thus

normalizing government revenue.


7/15


8/15

packs. While the revenue from tobacco industry is nearly Rs. 350 billion per year, the disease-treatment

cost is little over this amount. The central government has banned smoking in public places from Oct 2,

2008 the birth anniversary of Mahatma Gandhi. While some Indians are in favor of the smoking bans,

others are very unhappy about them. One group against these smoking bans is the tobacco industry.

The tobacco industry continues to deny any allegations that smoking has the slightest relation to health

issues. The tobacco industry also fears that the public will become too educated on the risks of smoking

and the damaging effects it has on human beings and would consequently reduce the industry's revenue

by a significant margin. Also if such bans were imposed on the public the tobacco industry would see a

decrease in revenue. Opponents of these bans say that such bans could harm the revenue of local

businesses also such as betel shops on the roadsides of public places and tea-stalls. Trying to mitigate

the negative impact of smoking bans on the industry several tobacco companies have greatly diversified

into different fields ranging from hotels, designer clothing, development programmes, and stationery tothe food business, etc. Despite all diversifications, the cigarette brands still continue to be their main

revenue generator. Whether these efforts of diversification are plans to reduce investment in tobacco

production and manufacturing are arguable. The tobacco industry in India is increasingly investing in and

extensively advertising non tobacco products by the same brand name. Attractive schemes such as

bravery awards, sponsoring film fare awards have also been conducted by several tobacco companies,

indirectly promoting their products.

This project tries to study the economic impact of ban on smoking in public places faced by the Tobacco

Industry. The Indian tobacco industry contributes an annual sum of about Rs.10271 crores to the

national exchequer by the way of excise revenue, and Rs.2022 crores (2006-07) by way of foreign

exchange. Indian Tobacco Industrys exports are likely to touch Rs. 16,050 million towards the end of

current fiscal. These data show that the Indian tobacco industry is a major player in the overall Indian

economy. It has been perceived that such a ban can lead to 100% smoke free society but thats

something virtually unattainable though it can cut on the present numerical regarding smoking and may

deter new smokers. As a matter of fact it is the old time smokers trying to quit who will constitute a

chunk to the negative figures. The addiction and long dated habit are hard to be deterred by such

regulations. India has also been unsuccessful at cracking down on smoking in rural areas and on the use

of other forms of tobacco like local cigarettes called beedis and paan, says a report in the Indian Express.


9/15

Methodology

The trends shown by the scrips of tobacco companies are being shown and the comparisons are done

scaling the economic crisis and other aspects.

Scrip Code: 500875 Company::ITC

Scrip Code: 500163 Company::Godfrey Phil

Scrip Code: 530299 Company::Kothari Prod


10/15

Scrip Code: 500151 Company:: GOLDEN TOBACCO LTD.

Scrip Code: 531552 Company:: RAGHUNATH TOBACCO CO.LTD.

Scrip Code: 509966 Company:: VST INDUSTRIES LTD.


11/15


12/15

Conclusion

Ban on smoking at public places all over the country comes into effect from today, the 2nd October

2008. Violation of the ban, imposed under the Cigarettes and Other Tobacco Products (Prohibition of

Advertisement and regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003,

will attract a fine of up to Rs.200.

Smoking will be prohibited at all places to which the public has access, including auditoriums, health

institutions, government buildings, restaurants, courts, public conveyances, public transport, stadiums,

railway stations, bus stops, workplaces, shopping malls, refreshment rooms, discotheques, pubs and

airport lounges. The ban will not cover open spaces.

Union Health Minister Anbumani Ramadoss has welcomed the Supreme Court order declining to stay

the Centres notification prohibiting smoking. He described the ban as a major step towards providing a

smoke-free atmosphere and protecting non-smokers from passive smoking. He said he had personally

written to Governors, Chief Ministers, Health Ministers and Members of Parliament to ensure effective

implementation of the ban.

The law clearly defines the duties and responsibilities of the owner, manager, proprietor, supervisor

and anyone in charge of a public place so that he or she could enforce these provisions. In large hotels

and restaurants having more than 30 rooms or 30 seats and airports, a provision for a separate smokingarea is made. Public places would have to identify the individuals empowered to enforce the law, issue

challans or collect fines.

Recent findings from the first nationally representative study of smoking in India found that this

country is in the grip of a smoking epidemic likely to cause nearly a million deaths a year starting in

2010. There are 120 million smokers in India, half of them younger than 30, the study found. India has a

larger population of smokers than any other country in the world except China. The research was

conducted across the country by a team of 900 field workers from India, Canada and Britain and the

results published online in the New England Journal of Medicine last week.

The study found that more than half of smoking-related deaths would be among poor and illiterate

Indians. It also offered some medical surprises about the way smoking worsens diseases, researchers

said. According to the findings, for example, 40 percent of tuberculosis cases in India were due to


13/15

smoking, since smoking converts the disease in the lungs more quickly. In the year 2010 alone, smoking

caused close to a million deaths in India, and 70% of these deaths occurred in men and women between

ages 30 to 69, according to Prabhat Jha, M.D., of the Center for Global Health at the University of

Toronto, and colleagues, who made those predictions in a special article published online by the New

England Journal of Medicine. Dr. Jha and colleagues studied smoking in a nationally representative

sample of 1.1 million Indian households. They compared the prevalence of smoking among 33,000

deceased women and 41,000 deceased men with the prevalence of smoking among 35,000 living

women and 43,000 living men. Typically Indians smoke bidis, a sort of mini-cigarette wrapped in the

leaf of another plant and which contains only about 25% of the tobacco in a U.S. cigarette. In the U.S.,

tobacco use accounts for at least 30% of all cancer deaths and 87% of lung cancer deaths, according to

the American Cancer Society. In 2007, about 168,000 (or one in three) cancer deaths will be caused by

tobacco use, the society added. Tobacco use was responsible for nearly one in five all-cause deaths peryear, an estimated 440,000 deaths in the U.S., during 1997 through 2001, according to the society.

Among the findings in India:

Roughly 5% of women ages 30 to 69 were smokers as were 37% of men in that age group. For women

ages 30 to 69, smoking was associated with a doubling of the risk of death from any medical cause (risk

ratio 2.0, 99% CI 1.8 to 2.3) and for men in that age group, smoking was associated with a 70% increase

in the risk of death from any medical cause (RR 1.7, 99% CI 1.6 to 1.8).

The most likely cause of excess mortality among smokers was tuberculosis (RR 3.0, 99% CI 2.4 to 3.9 for

women and 2.3, 99% CI 2.1 to 2.6 for men).

Smoking was associated with an eight-year reduction in median survival for women and a six-year

reduction in median survival for men.

Assuming the associations between smoking and excess mortality were mainly causal, smoking among

people ages 30 to 69 is responsible for one in five deaths in men and one in 20 deaths in women. In

2010, smoking caused 930,000 adult deaths in India.

Tobacco production is an important source of income for Indias farmers. While alternative crops are

available in terms of agronomic suitability, in general a move away from tobacco production would

result in reduced income and food security for a considerable number of farmers. Manufacturing,

particularly of bidis, is also a source of employment and hence of income for a large number of people.


14/15

Thus any attempts to control the use of tobacco would need to take into account the economic impact

on these sectors. To be effective, measures to control the use of tobacco would need to address all

forms of consumption, not only cigarettes. In particular, this would mean dealing with the economic and

political difficulties of taxing, or otherwise controlling, bidis and other non-cigarette forms of tobacco

consumption.


15/15

References:

dacnet.nic.in

The Indian Express

The Union Health Ministry of India

The Telegraph

Bombay Stock Exchange (bseindia.com)

Economic Times:

ban on smoking

Documents