UPDATE1-India tobacco exports may rise to record $600 mln

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By Rajendra Jadhav

MUMBAI, June 26 (Reuters) - India is likely to export a record $600 million of tobacco in 2008/09, as a shortfall in global output boosted demand and pushed up prices to new highs, a senior official said.

"Prices have risen about 70 percent from last year and importers are buying at these levels also. At this price, exports will touch $ 600 million (in 2008/09)," J Suresh Babu, chairman of the Tobacco Board, told Reuters on Thursday.

In the year ending March 2008, tobacco exports rose 32 percent to $503 million, he said.

The average price of Flue Cured Virginia (FCV), a premier grade used for cigarette-making, has risen more than 78 percent to 84.67 rupees per kg, from 47.47 rupees a year ago.

A shortfall in other main producing countries like Brazil has pushed up prices, which will sustain at these levels until global production rises, Babu said.

India is the second biggest producer of tobacco after China and the fourth-biggest exporter of unmanufactured tobacco.

However, rising exports and higher prices are hurting Indian cigarette makers like Kolkata based ITC Ltd (ITC.BO: Quote, Profile, Research), the biggest cigarette maker in the country, and Godfrey Phillips India Ltd. (GDFR.BO: Quote, Profile, Research).