India’s recent move to implement a digital trackand-trace (T&T) system for cigarettes is a commendable and necessary step toward modernizing a sector long plagued by informal practices and revenue leakage. 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-toend 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. India’s tobacco traceability reform cannot succeed without fully leveraging the transformative potential of the PM GatiShakti National Master Plan (NMP). Launched in October 2021, GatiShakti is much more than an infrastructure program—it is a digitally powered, multi-ministerial coordination platform designed to integrate and optimize India’s entire logistics and connectivity ecosystem.
With over 1,600 data layers onboarded from 44 central ministries and 36 states and built on a dynamic GIS platform developed by BISAG-N using ISRO satellite imagery, GatiShakti offers real-time spatial visibility of infrastructure projects across roads, railways, ports, waterways, airports, mass transit, and logistics hubs. This comprehensive, datadriven approach is precisely what India’s tobacco sector needs to build end-to-end traceability starting at the farm level. GatiShakti’s ability to map tobacco-growing regions, processing centers, storage facilities, and transport corridors on a unified platform enables identification of critical infrastructure gaps—such as poor road connectivity in smokeless tobacco clusters or lack of certified storage near key mandis—while optimizing multimodal routes to reduce logistics costs and delays.
More importantly, GatiShakti breaks down traditional silos by enabling seamless collaboration between ministries like Commerce, Agriculture, Finance, and the Tobacco Board, ensuring that traceability efforts are synchronized with export compliance, tax administration, and farmer support programs. The power of GatiShakti lies not only in planning but also in execution and monitoring.
Its real-time project dashboards and satellite data integration provide dynamic oversight of infrastructure development, allowing swift resolution of bottlenecks and ensuring that traceability infrastructure is implemented inclusively and efficiently. By embedding tobacco traceability within this national master plan, India can formalize its vast informal tobacco economy, plug revenue leakages, and meet stringent global sustainability standards such as those demanded by the EU. The platform’s scalability and technological sophistication make it the execution engine that can transform India’s tobacco supply chain from fragmented and opaque to transparent, compliant, and globally competitive.
The time to harness GatiShakti’s full potential for tobacco traceability is now—building traceability from the soil up, powered by India’s most ambitious infrastructure initiative. Traceability is not just about compliance—it is a gateway to value creation. Currently, over 70% of India’s tobacco exports are raw leaf, missing out on the 30–40% higher margins that processed and blended products fetch internationally.
Global markets increasingly demand transparent, sustainable supply chains, especially for emerging nicotine products subject to strict regulations. More than 90 countries now allow next-generation nicotine products—including heat-not-burn devices, oral pouches, and other cleaner nicotine delivery mechanisms. These formats are built around stricter regulatory standards and require full supply chain visibility by default. By formalizing its informal tobacco economy and embedding traceability at the farm level, India can move beyond volume-driven exports to become a leader in premium, compliant tobacco products, creating rural jobs and securing long-term market access.
The government’s digital T&T system is a promising start, but it cannot be the endpoint. Without extending traceability upstream to the farm, India risks perpetuating a fragmented, informal economy that undermines revenue, farmer welfare, and global competitiveness. The technology exists. The infrastructure is ready. The policy momentum is building. What remains is the political will to act decisively—to build traceability from the soil up and transform India’s tobacco sector for the future.
About the Author: Jaideep Vaideeswar is a former consultant to MyGov India. In this capacity, he has worked extensively on policy analysis, proposal, and implementation across sectors. He holds a Master’s degree in International Relations from South Asian University, a university established by SAARC.
The Author is a former consultant to MyGov India. In this capacity, he has worked extensively on policy analysis, proposal, and implementation across sectors.