Vice Squad
Wednesday, February 04, 2004
 
Evasion-Led Liberalisation of Tobacco Markets...


...in, er, India. (Really, this will be my final post based on my Delhi adventure. Trust me.) Last year Philip Morris received the right to import Marlboros into India; last week, the Indonesian cigarette brand Sampoerna was granted a similar privilege. Why the liberalised import regime? Evasion, once again. This article (registration required) from the Economic Times includes the following quotation from an Indian government official: 'There is no way we can stop smuggling of cigarettes. We can at best minimise its impact by officially allowing it to come into the country. By doing so, we can have some control on this unregulated industry.' Hmmm, might that same logic apply to other illegal drugs?

For a discussion of how evasion prompts reform, diehards can see my book, The Political Economy of Rule Evasion and Policy Reform. For a pre-India-trip Vice Squad look at cigarettes in India, see here. By the way, despite the smuggling, foreign cigarettes are but a small share of the market in India. The popular, tiny, inexpensive cigarettes in India would barely be recognized as cigarettes by US smokers. I bought a package of 25 "Mangalore Ganesh Beedies" for 5 rupees in Delhi (1 dollar equals about 44 rupees), and they are by no means the cheapest cigarettes available. Yes, the package is adorned with a drawing of Ganesh, the Hindu elephant god. Oh no, a quick web search has just informed me that the US cut off imports of these hand-rolled cigarettes in the late 1990s because the manufacturers allegedly employed child labour in abject conditions. This article suggests that the children were indentured servants. Oh, the more one reads, the worse it gets: Ganesh beedies are contraband in Oklahoma!

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