MISSING LINK IN INDIA'S TOBACCO REFORM IS DIGITAL TRACEABILITY AT THE FARM

India's recent move to implement a digital track-and-trace (T&T) system for cigarettes is a commendable and necessary step toward modernizing a sector long plagued by informal practices and revenue leakage.

- JAIDEEP VAIDEESWAR

The GST Council's approval, led by the Central Board of Indirect Taxes and Customs, aims to tackle illicit trade and recover an estimated Rs 21,000 crore annually in lost tax revenues. Yet, while this reform is bold, it risks missing the mark by focusing primarily on the factory floor—too late in the supply chain to capture the vast informal tobacco economy that dominates India's market.

The reality is stark: most tobacco in India never reaches formal manufacturing before it is traded. Bidis alone account for 81% of smoked tobacco use, yet 95% of bidi units remain unregistered. Smokeless tobacco products, made by thousands of micro-units operating largely off the books, escape regulatory oversight and taxation. Trying to regulate tobacco only at the point of packaging is like building a dam at the river's delta—ignoring the leaks upstream where the real value and risks lie. If India truly wants to modernize its tobacco economy, the traceability journey must begin where the tobacco is grown—in the fields of Andhra Pradesh, Karnataka, Bihar, Maharashtra, and beyond.

Fortunately, India already possesses the blueprint for such reform. Agricultural export sectors have successfully implemented end-to-end traceability systems that track produce from farm to port, helping meet stringent global standards and command premium prices. Platforms like APEDA's Grapenet and private initiatives such as INI Farms' QR-coded fruit demonstrate how technology can bring transparency, improve price discovery, and formalize informal producers.