Executive Summary:
This document is a response to Lok Sabha Unstarred Question No. 457 regarding the illicit tobacco market, answered on July 22, 2025. It details government awareness, actions taken to curb illegal trade, studies on taxation impact, and policy measures balancing public health with economic factors. The document includes data up to June 2025 on seizures and tax evasion cases.
Key Points / Main Content:
Illicit Tobacco Market and Revenue:
* Customs and Directorate of Revenue Intelligence (DRI) seized approximately 3.93 crore cigarette sticks up to June 2025.
* CGST zones and DGGI detected 61 cases involving tax evasion of approximately Rs. 104.38 crores related to tobacco products, also up to June 2025.
Measures to Curb Illegal Trade:
* A special mechanism was introduced for tobacco product manufacturers, requiring detailed information on manufacturing activities.
* The mechanism includes machine registration, monthly reporting, and technical validation certificates for machines.
* This system provides real-time monitoring of production capacity and machine operations.
* The Central Goods and Services Tax Act, as amended by the Finance Act 2025, empowers the government to establish a comprehensive track and trace mechanism for specified goods.
* A specific penalty for violations of the track and trace mechanism has been introduced.
International Cooperation:
* India is a party to the WHO Framework Convention on Tobacco Control (FCTC).
* India has ratified the Protocol to Eliminate Illicit Trade in Tobacco Products under Article 15 of WHO FCTC.
* The Ministry of Health and Family Welfare is collaborating with the Department of Revenue to implement a track and trace mechanism for tobacco products, in accordance with Article 8 of the FCTC Protocol.
Impact Analysis:
Manufacturers of Tobacco Products:
* Impact: Requires adherence to a new special mechanism involving detailed reporting on manufacturing activities, machine registration, and technical validation.
* Action Required: Register each machine, submit monthly reports, and obtain technical validation certificates for machines.
Government Agencies (Customs, DRI, CGST, DGGI):
* Impact: Enhanced powers and responsibilities in monitoring and curbing illicit tobacco trade through seizures, detections, and implementation of the track and trace mechanism.
* Action Required: Enforce the new track and trace provisions, impose penalties for violations, and collaborate with other agencies for effective implementation.
Ministry of Health and Family Welfare & Department of Revenue:
* Impact: Collaborative responsibility for implementing the track and trace mechanism for tobacco products as per the FCTC Protocol.
* Action Required: Develop and implement a comprehensive track and trace system in coordination with each other.
Key Entities Referenced
SHRI MANISH TEWARI: Member of Parliament who raised questions about the illicit tobacco market.
SHRI JITIN PRASADA: Minister of State in the Ministry of Commerce and Industry, who provided the answer to the parliamentary question.
Directorate of Revenue Intelligence DRI: An intelligence and enforcement agency of the Government of India responsible for combating smuggling and tax evasion.
CGST zones: Central Goods and Services Tax zones responsible for enforcing GST regulations.
DGGI: Directorate General of GST Intelligence
Central Goods and Services Tax Act: The primary legislation governing the Goods and Services Tax (GST) in India.
Finance Act 2025: Amendment to the Central Goods and Services Tax Act.
World Health Organization Framework Convention on Tobacco Control WHO FCTC: An international treaty adopted by the World Health Organization to address the global tobacco epidemic.
GOVERNMENT OF INDIA
MINISTRY OF COMMERCE & INDUSTRY
(DEPARTMENT OF COMMERCE)
LOK SABHA
UNSTARRED QUESTION NO. 457
ANSWERED ON 22.07.2025
ILLICIT TOBACCO MARKET
457. SHRI MANISH TEWARI:
Will the Minister of COMMERCE & INDUSTRY (वाणिज्य और उद्योग मंत्री) be pleased
to state:
(a) whether the Government is aware of the alarming rise in the illicit tobacco market,
if so, the details thereof along with the year-wise estimated revenue of the illicit
tobacco market, since 2015;
(b) the estimated revenue loss to the Union Government due to the smuggling and
illegal trade of tobacco products during the last ten years, State and year-wise;
(c) the steps taken to curb the illegal tobacco trade, including measures to
strengthen enforcement and prevent tax evasion;
(d) whether the Government has conducted any study on the impact of high taxation
on tobacco products and its role in driving illicit trade;
(e) if so, the details thereof along with the findings thereof and if not, the reasons
therefor; and
(f) whether the Government is considering any policy measures to balance public
health objectives with the economic impact on legal tobacco farmers and industry
stakeholders, if so, the details thereof?
ANSWER
वाणिज्य और उद्योग मंत्रालय में राज्य मंत्री (श्री णिणिन प्रसाद)
THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY
(SHRI JITIN PRASADA)
(a) to (f): Customs Field Formations and Directorate of Revenue Intelligence (DRI)
have seized around 3.93 crore sticks of cigarettes in the current financial year upto
June, 2025. Further, CGST zones and DGGI have detected 61 cases of
1Guthka/Chewing Tobacco/Cigarettes/ Pan Masala involving tax amounting to Rs.
104.38 crores approximately in the current financial year, upto June 2025.
The Government has introduced a special mechanism for manufacturers of tobacco
products and related products which covers certain categories of goods including
pan masala, various forms of tobacco (unmanufactured, hookah, chewing tobacco,
snuff, gutkha) and tobacco preparations, requiring manufacturers to furnish detailed
information about manufacture within specified timelines. The system mandates
registration for each machine, monthly reporting and requires certificates for
technical validation for machines as well, providing a real-time monitoring of
production capacity and machine operations to track the illicit manufacture and
supply of tobacco and related products. The Central Goods and Services Tax Act
has been amended by Finance Act 2025, which empowers the Government to
establish a comprehensive track and trace mechanism for specified goods. Further,
to ensure strict compliance with the track and trace provisions, a penalty specifically
for violations of track and trace mechanism has been introduced.
Government of India is a party to World Health Organization Framework Convention
on Tobacco Control (WHO FCTC) and has ratified the Protocol to Eliminate Illicit
Trade in Tobacco Products, adopted under the (Article 15) of WHO FCTC. Ministry
of Health and Family Welfare is working with Department of Revenue, Government
of India for the implementation of Track and Trace Mechanism for Tobacco Products
in accordance with Article 8 of FCTC Protocol.
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