Government of India’s Campaign against Smoking Hurting Farmers
The Government of India yesterday banned foreign direct investment (FDI) in cigarette manufacturing in the country. This ban will apply whether the manufacturing is for domestic consumption or export only. Home Minister P Chidambaram said “The approval is expected to enhance public accountability by way of the government’s commitment towards proliferation of anti-smoking regime in the country”. But will this ban have any positive impact? It most likely has a negative impact.
The current Indian government led by Manmohan Singh has enacted numerous laws and bills like the right to food act, right to job act and reservation for women in politics and so on that have good intentions but will not have any positive impact. In fact in the long run, many of these laws will have serious financial and social implications for the country. The future generation of Indians will have a tough task of untangling the social, legal and financial mess that this United Progress Alliance (UPA) government is in the process of creating.
The government’s policy on banning FDI in cigarette manufacturing and its overall attitude towards tobacco consumption fits nicely with the rest of its newly enacted “feel good” policies. It is important to note that this ban will not impact Indian tobacco companies that already manufacture cigarettes with foreign investment.
Indian tobacco industry is well entrenched. The four major cigarette manufactures (Imperial Tobacco, Vazir Sultan Tobacco, Godfrey Philips and Golden Tobacco) are among some of the oldest companies in India. In addition India like many countries in the Indian sub-continent have a very long history of growing and consuming tobacco in various forms for thousands of years (the Indian Bidi’s are very popular among teenagers in the United States).
The Indian government has so far enacted polices to curb the consumption of tobacco products long the lines of what Western governments are doing. But India has other issues that the West does not have. Tobacco is a major crop in India. Millions of poor Indian farmers depend on growing tobacco and the tobacco industry for their livelihood. For example according to the FAO report (Food and Agriculture Organization of the United Nations) about 2 million Indian farmers are engaged in Bidi leaf collection alone and another 4.4 million are employed for Bidi rolling (compare this to the Indian IT industry which employs only about half a million Indians!!).
According to the report the government of India and the Ministry of Agriculture has not launched any project since 1990 that will promote the production and quality of the tobacco that Indian farmers produce. This is despite the fact that tobacco is grown in 16 Indian states. This is also dumbfounding considering that tobacco crops yield higher returns than cash or food crops for the farmers. Tobacco also needs lower levels of irrigation and is very drought resistant compared to alternative crops.
Although India produces a lot of tobacco Indian exports account for only about 4% of world exports. Most people consume tobacco in the form of cigarettes but Indians and many others in South Asia and Middle East consume tobacco in “non-cigarette” methods. This and lack of technology and marketing has hampered India from playing a significant role in this major industry.
However, consuming tobacco in the non-cigarette form is rapidly growing worldwide. One of the fastest growing tobacco products in the world is called Snus. It is tobacco in a small pouch which is then placed under the lip. It releases nicotine into the bloodstream through the gums. It is a convenient alternative to smoking indoors or in public places.
Smoking is clearly a dangerous habit and the Indian government should do everything possible to educate its citizens about the dangers of smoking and consuming other forms of tobacco. Smoking is not the only vice that we human beings have. Alcohol abuse and gambling are major problems in most societies. But most government do not care about them.
The Indian government should not get overzealous and implement policies like banning FDI in cigarette manufacturing. Policies such as these impact Indian farmers and compromise the nation’s ability to compete with the rest of the world for a fair share of the world tobacco market. These are the types of polices that we are trying to get away from (Manmohan Singh was responsible for India’s liberalization polices in the early nineties. Now as the leader of the nation he has formulated a policy that will hamper Indian tobacco industries competitiveness).
The interests of our poor farmers and the economic interests of the country should any day get preference over perceived moral obligations. We cannot pass a “Right to Job Act” one day to benefit rural India and then turn around and ban FDI investment in tobacco manufacturing which will directly impact the Indian farmer and his/her earning potential.
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Category: News & Government
like the sugar lobby in the US which fabricated results related to artificial sweeteners, there are so many products that have strong lobbies that change govt. policy…
well presented…informative!
Thanks. You are right. I cannot understand why India would ban FDI when countries like the US that are fanatical about eliminating smoking have not done so. I think the government is overreaching.
The argument is bogus and appears driven by tobacco industry. A product that kills its ~2,500 users every day in the country definitely has no reasons to exist even. So, declining the FDIs in cigarette industry is one sane and laudable move of the Ministry of Commerce. Kudos to the Hon’ble Minister, Anand Sharma. Will FinMin and HM act accordingly..!?
Rakesh,
You say the argument is bogus but have not provided reasons why. You say it is driven by tobacco industry but have shown no evidence.
No one is arguing that smoking can increase your chances of getting cancer. No one is disputing that many people die because of heavy long term smoking. But the same is true for drinking and most other human “vices” like gambling and lottery. Smoking can never be stopped in India and the life of 6.5 million Indians who work in this industry is important.
When you say that declining FDI in the tobacco industry is good then I could argue that you are batting for the Indian tobacco industry. You want to keep out competition!