India’s tobacco exports have doubled over the past four years in dollar terms on rising global demand and prices as production takes a hit in countries such as Brazil and Zimbabwe. India’s shipments have increased in value from $923 million in 2021-22 to over $1,840 million till February in the current fiscal. They are likely to touch $2-billion mark by the end of March.
Per the Commerce Ministry data, tobacco exports registered 38.59 per cent growth during April-February 2024-25 at $1,840.70 million compared with $1,328.17 million a year ago. During February, tobacco exports were $141.80 million ( $111.87 million).
Uninterrupted supply
Yashwanth Chidipothu, Chairman, Tobacco Board, said India is in an advantageous position in terms of tobacco production compared to its competitors. “The Covid-19 situation in 2021 was like a boon for the tobacco industry in India. Compared to competing countries, India’s vaccination efforts ensured that agricultural activities, including tobacco farming, were not disrupted. Also, agriculture was given priority, and facilities were provided for the transportation of farmworkers and goods, considering foodgrains as essential commodities. As a result, the agricultural sector in India, unlike other industries, performed as usual,” he said.
However, the competitors faced difficulties during the same period. Lack of vaccination in those countries prevented them from properly growing, marketing, and processing tobacco.
“This led to a situation where major global manufacturing companies’ stock slowly depleted. Generally, big companies maintain a buffer stock of at least 6-7 months. During 2021-22, while the international market faced a critical situation, India continuously produced tobacco,” Chidipothu said.
“Despite some minor issues with low-grade tobacco, which the then and previous governments addressed through market intervention, overall production of high-grade tobacco, used internationally, remained consistent. This positioned India as a consistent global supplier during that period. This positive trend continued into 2023 and 2023-24. Andhra Pradesh achieved a record-level production of 215 million kg (mkg) for auctions, against a target (crop fixation) of 142 mkg,” the Tobacco Board Chairman said.
Global shortage
On the other hand, the international market faced shortages along with high demand. In the previous year, Brazil, which usually produces 700 mkg, saw its production limited to around 460-470 mkg due to excessive rainfall. Similarly, Zimbabwe also faced drought conditions triggered by the El Nino conditions and even lacked wood for curing the tobacco crop. Zimbabwe’s production fell from 300 mkg to 270-260 mkg.
“Indian farmers seized this opportunity and successfully sold 215 mkg of tobacco in the previous year. Almost no tobacco leaves were left with the farmers,” Chidipothu said.
Due to the shortage, even other types of tobacco like burley — which are used for blending with Virginia tobacco — saw a surge in demand.
India is the second largest producer of tobacco after China. India is the second largest exporter of unmanufactured tobacco after Brazil and is the fourth largest producer of flue cured virginia (FCV) tobacco.
Vikram Urs, Secretary, Federation of Karnataka Virginia Tobacco Growers Association, said the shortfall in output in Brazil and Zimbabwe over the last two years has fuelled the demand for Indian tobacco in the overseas markets, resulting in higher prices for the growers here. Average auction prices were up by about a tenth this year, Urs added.
