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Bidis and illegal tobacco add up to an unusual challenge in India

Written by || 4th October 2016 || Business briefing |

India_900x540_MMIndia’s largely undeveloped e-cigarette market has growth potential, but tobacco remains cheap and highly competitive, with a significant black market.

A new Indian report by ECigIntelligence shows that the price of manufactured tobacco cigarettes is much lower than in other countries and that they are cheaper than e-cigarettes.

The price differential is even greater when e-cigs are compared with bidis, the cigarettes hand-made from tobacco wrapped in special leaves, which at just an eighth of the price of a regular cigarette are preferred by a majority of Indian smokers.

Nearly 90% of tobacco sales in India is attributed to smokeless tobacco, bidis or illegal cigarettes.

National authorities have banned some smokeless tobacco products and implemented restrictive regulations, such as increasing the cigarette tax. But the government seems not to trust e-cigarettes as a smoking cessation aid.

Four Indian states – Haryana, Karnataka, Kerala and Punjab, together representing about 25% of the national population – have banned the use of e-cigarettes. Nevertheless, there is potential for the market to grow in big cities with no restrictive regulations, the ECigIntelligence report suggests.

 

What This Means: India’s unusual pattern of tobacco use presents an exceptional challenge both to the government and to any companies wishing to exploit the potential for growth in a largely undeveloped e-cigarette market.

But the presence of a large black market is a complicating factor that is likely to remain for a long time.

– David Palacios ECigIntelligence contributing writer

Photo: MM