Excise duty hike pushes cigarettes off the shelf

Excise duty hike pushes cigarettes off the shelf

SRINAGAR: Once witnessed significantly in food items and LPG, hoarding this time has hit tobacco products with supply chains of different companies limiting market penetration of cigarettes while retailers dry it up at the customer end.
Prices of tobacco products are expected to soar by 10-15 percent from April 1 this year following Government of India’s budget proposed to increase excise duty on these products. One of the main dealers of Godfrey Phillips India Ltd., India’s second largest cigarette and most selling cigarette band in Valley, told Kashmir Reader that that supplies are squeezed at different levels and this escalation is ‘win-win situation’ for many in this trade.
He said that Godfrey Phillips brand of cigarette will show a surge of Rs 4-5 per pack. “When this is calculated in volume we consume, it does make lot of earnings. I feel both wholesaler and retailer will benefit with this price rise. That is why there is hoarding,” he said.
He added the shortage of cigarettes will end in week’s time, by the time packs bearing new rates arrive in the markets.
Retailers, however, say that supplies are more restrained from top that is why some cigarette brands are being charged more.
Muhammad Aslam a retailer told Kashmir Reader that rates have already been shot up. He said that retailers have an edge as they sell cigarettes loose in the market and they are waiting for the new price list to hit the market.
Dealers of India’s leading cigarette company, ITC Ltd, which manufactures more costly cigarettes, told Kashmir Reader that shortage is due to some of their brands getting exhausted in the market with supplies of some brands being hit after recent budget announcements.
“The company operates on different marketing and pricing strategy. Excise on cigarettes mostly depends on size and companies many times do not pass the burden on the customers to remain competitive in the market. But they do scale down size of the products at times,” he said, adding hoardings are more in the retail side and usually start around the budget time that create dearth in the market by the end of March.
“The magnetism is less this year, as there has not been a whopping tax hike as expected, but some of the brands have gone off the shelves,” he said.
He maintained that the taxation is “discriminatory” at times and people move to other consumable tobacco products. About the estimated consumption of cigarettes, he said that on an average the sales of cigarettes by different companies do touch Rs 75 crore per month.