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Category : Sectoral Trackers
Min Investment : 9,356
India is the second largest tobacco producer and third largest exporter in the world. Domestically, only around 15% of tobacco is consumed in the form of cigarettes. Majority is consumed in the form of chewing tobacco and bidis. The widespread anti-smoking health awareness programmes gives us the impression that a large part of our population is addicted to tobacco but the reality is that India's per capita consumption is only 10% of the global average.
Apart from its ill effects on health, the tobacco industry generates more than USD 2 billion revenue to the government in the form of excise duty. While the government is determined to discourage the consumption of tobacco in all forms and since its anti-tobacco measures are long-term, the industry has started focusing on exports which have been growing rapidly. Today, India exports to about 100 different countries.
On the positive side, it has brand loyalty and the lifecycle of a consumer lasts many years. The business of addiction may not be morally correct in the eyes of society, but it is surely profitable. Looked at from the other side, it attempts to makes tobacco less hazardous, generates income to more than one lakh farmers, generates huge tax revenues for the government and increases the foreign exchange reserves of India.
Government policies have a very large impact on tobacco companies and hence, it is important to keep an eye out for the latest developments while you are invested in 'Big Tobacco'.