was the third leading world producer of leaf tobacco in the recent decade, following China and Brazil. Tobacco production in India averaged about 615,000 tons dry weight annually during 200608. About a third of the output consisted of flue-cured tobacco. The India Tobacco Board manages arrangements for farmers to grow tobacco and for the auction markets. All tobacco grown for commercial purposes is sold at through an auction system. Prices paid to farmers for tobacco increased in recent years as demand for domestic uses and exports expanded.
Many small farmers grow tobacco. The southern states of Mysore and Karnataka account for most of the production of flue-cured tobacco. Guntur is a major center for marketing leaf tobacco and preparation of supplies for export. Employment by cottage industries preparing the small bidis and mixtures for pipe tobacco is an important factor in India. Anti-smoking measures have included bans on smoking in public transportation and within 100 yards of schools.
India's leaf tobacco exports averaged about 168,000 tons annually during 200608, or about a tenth less than that by the United States. The value for India's leaf tobacco exports was $334 mn in 2007, for and average of $1,992 per metric ton. Flue-cured shipments accounted for over 80% of India's tobacco exports in recent years, and the average price for those sales was higher than the exports of dark sun-cured tobacco.
Belgium Is The Leading Destination For India's Tobacco Exports:
Belgium was the leading destination for India's leaf tobacco exports in recent years, followed by Russia, Philippines, Netherlands, and Germany. A large share of the leaf tobacco exported from India to Belgium is subsequently distributed to cigarette factories in other countries. India exported 22,561 tons of tobacco to Belgium in 2007, valued at $55.6 mn, for an average price of $2,462.39 per ton.
Russian Market Remains Important Despite Downward Drift In Shipments:
Russia has traditionally been a top export destination for India's tobacco exports, although shipments to Belgium became more important in the last several years. Moscow trading firms became large buyers of tobacco in India in the 1980s when use of rupees obtained from exports of Russian manufactured goods was arranged through trade agreements. In the recent decade the transactions have been on a commercial basis. India exported 18,913 tons of leaf tobacco to Russia in 2007. That was only about half the 39,055 tons of tobacco shipped from India to Russia in 2005.
India's share of Russian leaf tobacco imports was about 13% during 200305, but by 2006 it declined to about a tenth. Greater shipments of tobacco to Russia from Brazil and some suppliers in Africa other than Zimbabwe meant greater competition for sales of India's tobacco to Russia. India has been a major supplier of flue-cured tobacco for Russian cigarette factories for the last two decades, despite the downward drift recently for market share. The average price paid for tobacco imported from India was $1,642 per ton in 2007 was less than half the average for arrivals of Brazilian tobacco, and about a fifth of the price for imported US tobacco.
Philippine Imports Of Tobacco From India Bolstered By Expanding Cigarette Exports:
Greater exports of cigarettes by Philippine manufacturers to customers in other countries of ASEAN (Association of Southeast Asian Nations) contributed to increased demand for imported tobacco. That contributed to increased imports of tobacco from India. Shipments of tobacco from India to Philippines reached 11,774 tons, valued at $26.2 mn in 2007, for an average price of $2,231 per ton.
Dutch Manufacturers Use Flue-Cured Tobacco From India For Cigarette Blends:
Imports of US tobacco into Netherlands declined in recent years as arrivals from Brazil and India increased. The average price of Dutch cigarette exports of over 64 cents per pack of 20 was among the highest recorded for major exporters in the last two years. Exports of leaf tobacco from India to the Netherlands reached 11,014 tons for an average price of $1,907.75 per ton in 2007. Use of less costly tobacco from India and some other suppliers allow Dutch cigarette manufacturers to reduce the average price for cigarette ingredients.
India's Share Of German Tobacco Imports Was Higher In The Past:
Increased competition from Brazil, Argentina, and some countries in Africa tended to limit prospects for expanding India's share of German imports of flue-cured tobacco from India in recent years. India exported 10,057 tons of tobacco to Germany in 2007 for an average price of $2,512 per ton. Some managers of India Tobacco Board have sought to have farmers grow better quality flue-cured tobacco for export. They have arranged to reduce the propensity for the content of undesirable components in tobacco. Their efforts may be reflected in the average price for exports of tobacco from India to Germany, Australia, and Romania.
Competition Remains Strong For Shipments Of Tobacco To United Kingdom:
Total use of leaf tobacco in the United Kingdom has declined in recent years because of smaller output of cigarettes, both for the domestic market and for exports. A steep decline for arrivals of tobacco from Zimbabwe into the UK accounted for much of the overall downward drift for total imports. India's tobacco exports to the United Kingdom fell from 10,000 tons in 2004 to 7,755 tons in 2007, for an average price of $2,158 per ton.
Upward Trend For India's Tobacco Exports To Poland Likely:
Poland is one of the world's fastest growing cigarette exporters. Exports of cigarettes from Poland in 2009 may be near the quantity shipped from the United States. Most of the extra cigarette exports from Poland are made predominated from imported leaf tobacco. India's shipments of tobacco to Poland rose to 3,077 tons in 2007. Further gains are likely.
Exports To Some Other EU Countries Remain Strong:
The EU accounted for about a third of India's exports of 167,637 tons of tobacco in 2007 and 2008. In addition to the significant shipments to Belgium, Germany, Netherlands, and the UK, exports to France, Romania, and Sweden have remained strong. The dramatic increase for French exports of cigarettes to Middle East markets in the last two years contributed to rising imports of leaf tobacco. India's exports of tobacco to France rose to 3,562 tons in 2007. India exported 1,847 tons of tobacco to Sweden in 2007 for $929.62 per ton, including some dark tobacco for snuff. Romania expanded cigarette output recently as efforts were made to reduce imports. India exported 1,461 tons of tobacco to Romania in 2007, for an average price of $$2,671.46 per ton.
South Korea Is An Expanding Market:
India exported 7,135 tons of tobacco to South Korea in 2007 for an average price of $1,900 per ton. South Korea is the third leading destination for India's exports of flue-cured tobacco after the EU and Russia. Gains for South Korea's exports of cigarettes to UAE, Iran, and Iraq contributed to increased demand for imported tobacco.
India's Tobacco Exports To Middle East Face Strong Competition:
Egypt had been a much larger customer for India's tobacco exports annually during 200306 than the 3,997 tons shipped in 2007. Brazil has been an expanding supplier of leaf tobacco for Egypt, Turkey, Iran, and some other countries in the Middle East. That has limited prospects for expanding leaf tobacco exports to the region from India. Yemen is a special market for dark sun-cured tobacco. India's exports of tobacco to Yemen were 5,745 tons in 2007, or about a third below the level during 200306. Exports of tobacco from India to Jordan reached 654 tons in 2007. Shipments of tobacco from India to Turkey were 494 ton in 2007.
The cigarette market in Iraq currently appears to be provided mostly by imports from the EU, Switzerland, and South Korea. If efforts are made to expand cigarette output in Iraq, it appears that India may become an important supplier of imported leaf tobacco. Production of tobacco in Iraq averaged less than 4,000 tons annually during 200608, compared with about 18,000 tons annually during 198082.
Expanding Indian Economy Contributes To Stronger Demand For Cigarettes:
India has been an economic success story in recent years. In the early 1970s, large sales of wheat and some other agricultural commodities were exported by the United States to India through food aid programs with payments made in local currency, the Indian rupee. About 35 years ago the conversion value for the Indian rupee was about 12 cents. Money accumulated with the Disbursement Office of the American Embassy in New Delhi, and some economists complained that the US was the largest holder of a savings account with Indian banks. Then in the late seventies, the State Department arranged to give the equivalent of about $6 bn to the Government of India. The funds were used effectively for many economic development programs. Thirteen universities were built after the pattern of US land grant universities with a special focus on studies in agriculture, engineering, and computer science. The Green Revolution was launched partly from those funds. This helped to finance irrigation projects, fertilizer and tractor factories, and other economic development projects.
Per capita income for India increased sharply in the recent decade, especially for the urban population. Good gains in manufacturing and agricultural output contributed to higher income. Great success for exports of manufactured goods provided some of the most remarkable gains for income. GDP increased about 9% in 2007. India recently had total exports of over $150 bn, or more than ten times the level two decades ago. Manufactured goods accounted for a rising share of exports in the last five years. Total exports were greater than imports in recent years, providing a trade surplus and an accumulation of foreign exchange. The value of the Indian rupee declined to an equivalent of about 2 US cents recently. Yet, many export and import contracts are made in US dollars or the euro. Crude petroleum accounts for about a third of the value for total imports.
Prosperity Brings Greater Sales Of Factory Made Cigarettes:
The prosperous economy has contributed to greater sales of manufactured cigarettes (called white cigarettes), despite a number of anti-smoking measures. For example, no smoking is allowed on trains. Places where cigarettes are sold must have a graphic display of the dangers of smoking. Increased taxes have been greater for white cigarettes than for bidis. Yet, the share of white cigarettes in the total sales of tobacco products has grown to about 100 bn pieces annually.
Manufactured cigarettes account for about a sixth of the consumption of tobacco products in India. Various laws have been passed to inhibit cigarette sales, but the advancing economy tends to pull up demand despite the measures made to depress sales. Gold Flake is considered India's premium cigarette brand. Import numbers do not provide a proper report for sales of imported cigarettes. Workers from other countries returning home for a visit often bring some major world brands with them. This includes some of the famous American brands and some of the leading brands found in the United Kingdom.
A wide variety of bidis can be found in India. Some bidis contain spices mixed with tobacco. Small cigarettes produced by many cottage industries provide about 38% of the tobacco products. Mns of people are employed in small shops where tobacco products are sold. Taxes have been increased on white cigarettes while it has not been considered favorably to administer greater taxes on sales of bidis.
Cigarette Exports Face Rising Competition In Middle East Markets:
Cigarettes from India averaged about 1.7 bn pieces annually during 200406. During 2007, India reported exports o 932 mn cigarettes. Leading destination was the United States, a market for 272 mn pieces. United Arab Emirates was the destination for 178 mn cigarettes exported from India in 2007. That was below the pace of shipments during 200406, partly because of rising competition from Switzerland, South Korea, and Poland. Bahrain was the destination for 18 mn cigarettes from India in 2007. Vietnam was a market for 103 mn cigarettes from India in 2007, despite strong competition from Philippines, Thailand, and Indonesia.