Calcutta, Feb. 28: The cigarette industry is shocked at the budget proposals to tax it more, while leaving out the bidi segment altogether from the hike.

The finance minister has proposed to increase the specific rate on cigarettes by about 10 per cent and impose a surcharge of 10 per cent ad valorem duties on other tobacco products, including gutka, chewing tobacco, snuff and pan masala. Bidis are being left out of it.

?It is a harsh budget for the cigarette companies,? Anup Singh, executive director of ITC, said.

The industry expects the proposal will help the government mop up an additional Rs 600 crore.

As a result, the retail prices are expected to go up in the market. The hike would be brand-specific, depending on the strategy taken by individual companies.

It also expects the tobacco consumption to go up following the hike in excise duty. ?Almost 50 per cent of the consumption is in dual form, cigarette as well as bidi. With cigarette prices going up, people will shift towards bidi,? Udayan Lal, director of Tobacco Institute of India (TII), said.

The cigarette industry contributes over Rs 6,000 crore in excise revenue annually. While it accounts for 14 per cent of total tobacco consumed, it contributes 85 per cent of the revenue from the sector.

Lal said cigarette sales have remained static in last 20 years at 95 million sticks.

On an average, the excise duty on cigarette stands at 130 per cent on the ex-factory price.

The industry is anguished for the fact that bidis sell about 8 times more than cigarettes but was left out of the tax net.

However, the tax compliance in the bidi sector, which is highly fragmented across the country, is very poor.

?Had both bidi and cigarette been equally taxed, the industry had nothing to complain. But this has not happened,? an expert said.

Excise duty has risen by Rs 15 per 1,000 sticks for the non-filter segment at Rs 178 in case of premium filter segments. In comparison, excise duty on bidi is Rs 7 per 1,000 sticks.