Tax Relief

Indian tobacco is aiming for a 5% tax break to spice up exports

With a shrinking export base and growing competition from smaller countries, the tobacco industry wants tax breaks to boost exports.

The Indian Tobacco Association (ITA), which accounts for 90-95 percent of tobacco exports, has urged the union government to extend the benefits of tariff and tax remission on exported products (RoDTEP) to save the industry.

Goods exports rose 49.85% in July to $ 35.43 billion

“We expect at least 5 percent tax relief from the regulation. We received 2-4 percent tax breaks some time ago, but we don’t have any, ”said Maddi Venkateswara Rao, President of ITA.

The government has issued a number of reimbursement rates under the RoDTEP program.

Exports rise 48% to $ 35 billion in July; Imports up 59% to $ 46 billion

From January 1, 2021, the system will offer waiver rates of 0.5 to 4.3 percent.

Dwindling exports

Tobacco exports fell to 3.780 billion in the period 2020-21, from 4.850 billion in 2013/14, as the quantities fell from 236 million kg to 169 million kg in the period.

“This shows how our export earnings have decreased over time,” said Rao.

He attributed the decline to growing support for the tobacco sector in countries such as Zimbabwe, Tanzania, and the United States, as well as the European Union.

He said the country is well positioned to become a major player in the global tobacco trade. “But the sharp rise in the costs of cultivation, transport and logistics have had a negative impact on the price competitiveness of our tobacco sector,” said the ITA President.

He regretted that tobacco was not included in the RoDTEP program.

challenges

While some countries offered subsidies to tobacco growers, which affected the competitiveness of Indian tobacco, the European Union has extended duty-free imports from countries like Bangladesh, Nepal, Malawi and others, he said.

“The spread of a tariff quota in the US affects us too. The US market is open to countries like Argentina, Brazil and Thailand at a reduced import tariff, while non-quota imports from countries like India are taxed at an ad valorem rate of 350 percent, ”he said.

“As a result, the Indian tobacco sector is being denied a level playing field in global competition,” he argued.

The ITA believed that the benefits of RoDTEP could help the Indian tobacco sector become globally competitive and benefit farmers.

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