In a bid to discourage bidi companies, a non-governmental organisation recommended that the bidi industry be brought under excise tax net to make bidi production less profitable.
Releasing its latest survey data, the Voluntary Health Association of India (VHAI) said the tobacco industry's contribution to the country's Gross Domestic Product (GDP) was insignificant and bidi companies, which are exempted from excise duty, should be taxed.
'The existing taxation system allows the bidi industry to evade paying taxes, taking advantage of the fact that manufacturers producing less than two million bidis a year are exempted from excise duty,' said Saradinu Bhaduri of the Centre for Studies in Science Policy (CSSP).
'However, considering that tobacco causes diseases like cancer, lung and cardiovascular diseases, tobacco use must be discouraged and a new form of tax should be levied on bidi companies,' he added.
According to their studies, not only is the share of the tobacco industry in India's GDP insignificant, the share of output of tobacco and related products in the country's manufacturing GDP is also marginal.
'The tobacco industry's contribution to the country's registered industrial GDP declined from around 1.8 percent in 1999-2000 to around 1.1 percent in 2005-2006. The tobacco industry's share in the total excise duty revenue has gone down from about 48 percent in 1950-1951 to 12 percent in 2000-2001,' Binoy Matthew of VHAI said.
'Despite the hazards of tobacco use, the argument that tobacco contributes jobs, revenue and income has been a continuous and formidable barrier in our country. For this reason, there is a need to analyse the benefits from tobacco production, trade and consumption as compared to the huge economic and health costs,' he added.
