ECONOMY NEXT: Smuggling of tendu leaves which are used to manufacture beedi in Sri Lanka has sharply increased in 2022, the island nation’s navy said as the government imposed high taxes on tobacco products.
“There is a huge increment in the number of captures in 2022 compared to last year,” Navy Media Spokesman Gayan Wickremesuriya told EconomyNext.
“When the local market products are expensive, people try other unofficial methods to bring down tobacco for a lower cost and to gain a profit.”
Sri Lanka navy has seized 14,983 kg of beedi leaves – mainly from Indian dinghy boats – in the last year, a 21.7 percent jump compared to 12,310 kg in 2021, Wickremesuriya said.
In 2020, the navy captured 5340 kg.
Cash-strapped Sri Lanka raised tobacco taxes twice in 2022.
“Beedi is mostly used in villages and made by the tendu leaves which is unofficially brought down to the country through the Indian fishermen into the Sri Lankan border and is commonly seen in the northern sea area, Manner and Northwestern coastal area,” Wickremesuriya added.
“There is a surveillance system in the Navy. It can be changed based on the intelligence that we receive. We have not reduced the number of patrols and other than that we increase the security in case of an emergency.”
Tendu leaves are subject to import taxes, hence the prices are high when they are brought down legally.
“They (consumers) compare the price of tendu leaves in the two countries, Sri Lanka and India and go with the cheaper one,” said Wickremesuriya.
“The Indian fishermen bring tendu leaves from their boats to the Sri Lanka border and sometimes
when they are tracked by the navy, they dump them in the sea and escape. And sometimes they
dump in the waters until they find a buyer.”
The navy seized 150 kg tendu leaves in Sri Lanka’s Northwestern coastal area of Kalpitiya on December 28.
Analysts expect the smuggling to rise further after the government increased the tobacco tax further by 20 percent this week. (Colombo/Jan04/2023)