Indian tobacco seeks 5% tax relief to boost exports

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The tobacco industry in India wants tax incentives to assist boost exports. As we all know, there’s a decreasing export base due to an increase in competition from smaller nations. Therefore, Indian Tobacco seeks 5% tax relief. The Indian Tobacco Association (ITA) which accounts for 90%-95% of the export of tobacco has requested that the Union government expand tax relief under the Remission of Export Product Duties and Taxes Scheme (RoDTEP). In this article, we will discuss the latest update on this in detail.

Decrease in Tobacco Exports in India

As per Maddi Venkateswara Rao, President of ITA, Tobacco exports decreased to Rs. 3,780 crore in 2020-21, down from Rs. 4,850 crore in 2013-14, while volumes fell to 169 million kg, down from 236 million kg over the same year.

He further states that there is a lack of support for Indian Tobacco exports in countries like Zimbabwe, Tanzania, and the US, as also the European Union. Thus, Rao remarks, “This demonstrates that over a period of time our export income has dropped.”

Reason for declining of Tobacco Exports

Mr. Rao claims that the country is ideally placed to become a major player in expanding the world trade of tobacco. “But the sharp increase in agricultural, transportation, and logistics costs had a negative effect on our tobacco industry’s pricing competitiveness,” stated the chairman of ITA.

In addition, the reason as per the President of ITA for declining of Tobacco Exports in India is the exclusion of Tobacco in the RoDTEP scheme.

Indian tobacco seeks 5% tax relief to boost exports and Counter other challenges in the export business

One of the major problems Indian Tobacco Exports are facing is that several nations are providing subsidies to tobacco growers, affecting the competitiveness of Indian Tobacco. For example,  the EU has broadened the duty-free import system for countries like Bangladesh, Nepal, Malawi, and others.

Another major problem stated by ITA is “We are also affected by the existence of a tariff-rate quota in the US. The US market is available to countries like Argentina, Brazil, and Thailand at a subsidized import tariff rate, but non-quota exports from countries such as India have to pay a hefty tax rate such as ad valorem to 35%,” he added.

In addition to benefiting farmers with other schemes, the ITA suggests that RoDTEP advantages might assist the Indian tobacco sector become more globally competitive. Thus, Indian tobacco seeks 5% tax relief from the central government to boost exports worldwide.

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