MUMBAI, - 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, the biggest cigarette maker in the country, and Godfrey Phillips India Ltd.

A new cigarette tax in New York has smokers flocking across the border to Pennsylvania.

On any day it's not hard to find New York license plates in Great Bend Township just a few miles across the border from the Empire State.

On this day there was car after car after car of cigarette smokers who are now coming to Pennsylvania to buy their favorite pack.

It comes after New York hiked its tax on cigarettes an additional $1.25 a pack.

Stanley Potter drove 13 miles to get there from Binghamton.

"Because they went up a buck and a quarter up there in New York. The taxes are outrageous! I'm not going to pay $6.50 for a pack of cigarettes anymore," Potter said.

His pack of Marlboros is less than $5 at Smokin' Joe's in Great Bend Township.

Next door, at Tobacco Junction, Bob Auble noticed a lot of New Yorkers coming in to buy smokes, even before the new tax.

"They were coming in buying two or three cartons at a time. It's going to be even worse now," Auble said.

New York's new cigarette tax is considered the highest in the nation.
Smokers there now pay $2.75 a pack just in taxes alone. It's even worse in New York City, which has it's own tax on cigarettes. Smokes in the Big Apple could now cost more than $10 a pack.

Dave Homza of Kirkwood sums up his reaction. "I'm going to try to quit. It's easier said than to be done," Homza said. He's not alone.

The Empire State's health commissioner expects 140,000 New Yorkers to quit smoking because of the increase.

Stanley Potter knows he won't be one of them. "Either that or quit smoking. I'd rather just come down here, you know," Potter added.

Now the bad news for smokers here in Pennsylvania.

There's a proposal in Harrisburg this year to hike Pennsylvania's cigarette tax an extra 10-cents per pack to help pay for expanded health care coverage.