“These factors will help consumers access cigarettes and other tobacco products at a much cheaper rate due to substantive cost benefits and will be a ... NEW DELHI: Tobacco companies will not be able to set up units in special economic zones (SEZ).

The government feels that factors such as easy availability of raw material, cheap labour, attractive industrial climate and strong market demand are open invitation to companies in the tobacco sector from across the world to come to India. “These factors will help consumers access cigarettes and other tobacco products at a much cheaper rate due to substantive cost benefits and will be a serious public health issue in time to come,” a senior government official told ET. Though SEZs will only host export-oriented units, they are allowed to sell a certain percentage of their produce in the domestic market.

Units can avail of the facility after fulfilling export obligation. The proposal seeking ban on tobacco units in SEZs has been moved by the ministry of health and family welfare. In the proposal, the ministry has also attributed a high risk of revenue pilferage as the reason for discouraging tobacco units in SEZs. “Allowing tobacco units in SEZs and permitting domestic sales would negate the government policy on licensing restrictions.

Considering the high levels of tariff there would be a high risk of evasion/pilferage from the units,” the proposal says. The ministry has also quoted the negative socio-economic impact of tobacco. In the last couple of years, the government has taken measures to check consumption of cigarettes and other tobacco products in the country. In the last two Union Budgets, excise duty on cigarettes has gone up 5%.

Also, a ban was imposed on smoking in public places, and the government undertook a mass awareness campaign to make the policy a success. However, the efforts haven’t yielded concrete result and surveys suggest.

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