Expanding India’s Oral Tobacco Exports: Economic Opportunity and Outlook
This paper examines how India can transform its tobacco sector by shifting from low-value raw leaf exports to high-value oral tobacco products, such as snus and nicotine pouches. While India is the second-largest tobacco producer globally and recently became the top exporter of unmanufactured tobacco, most exports remain in raw form, limiting economic returns. The report argues that by processing more tobacco domestically, India can capture greater value, enhance farmer incomes, increase tax revenues, and tap into the rapidly growing $15 billion global oral nicotine market.
The paper outlines the current structure of India’s tobacco value chain, identifying inefficiencies in value capture and highlighting the emergence of domestic snus and nicotine pouch manufacturing. It explores the fiscal implications of value addition, including gains from corporate tax, job creation, and rural income growth. The report assesses regulatory and trade compliance, concluding that India can expand exports within WTO rules, provided it avoids prohibited subsidies and aligns with technical standards in target markets. It also draws on global benchmarks from Sweden, Zimbabwe, Brazil, and Indonesia to compare strategies for domestic value capture.
A 5-year export projection is presented under three scenarios—baseline, moderate, and high value-addition—showing how processed product exports could elevate India’s tobacco trade to over $3 billion annually. The paper concludes with strategic policy recommendations, including investment in processing infrastructure, farmer–processor linkages, regulatory compliance, ESG alignment, and market diversification. Overall, the report offers a roadmap for India to become a leading exporter of oral nicotine products while supporting rural livelihoods and navigating global health and trade considerations.
Key Words: Tobacco Industry, Oral Tobacco Products, Value Addition (Tobacco), Tobacco Exports, Farmers Income
