International competitiveness of the Indian FCV (flue-cured Virginia) tobacco industry

Abstract

India presently is the second largest producer of tobacco in the world after China. The domestic cigarette industry enjoys significant competitive advantages but the regulatory hurdles coupled with heightening competition continue to impact the domestic leaf tobacco industry. India is a major grower and exporter of FCV tobacco in the world. Although India accounts for 10 per cent of the World tobacco production its share of tobacco exports is less than 1 percent. With reference to variety of tobacco produced globally tobacco production has shifted towards FCV (Flue cured) variety (currently accounting for 60 percent of total production) with the non FCV tobacco share declining drastically to 14 percent. The study includes the analysis of Indian FCV tobacco industry with emphasis on the competitiveness aspect to bring out the synergies needed to address the lucrative export segment to its maximum potential. The study prominently focuses on the following research questions: • To examine the international competitiveness of the India FCV Leaf Tobacco industry with the help of the policy analysis matrix framework. • To carry out a SWOT analysis of Indian FCV leaf tobacco industry. • To formulate a long term strategy to enter and compete in global tobacco market. The following are the important findings of this study: • The value of DRCR (0.392924<1) obtained indicates that FCV tobacco industry in India has certain degree if competitive advantage. • The Indian FCV tobacco has been found to be internationally competitive with respect to low cultivation cost low export price and low labor cost.