A spurt in global demand has more than doubled the prices of lower grade Indian tobacco at 2 dollar a kg while the rates of the best quality Indian tobacco has gone up over 60 per cent to 6.5 dollar in international markets since 2007.

"The prices of Indian tobacco in global markets have gone up to the range of 2-6.5 dollars a kg across categories in 2008 compared with the rates between 80 cents and 4 dollars a kg in 2007," Tobacco Board Chairman J Suresh Babu said.

Shortage of tobacco in major global markets like China has also contributed to the hefty increase in the prices of Indian tobacco, Babu added.

On the back of rising demand, exports have also seen a significant increase.

"Exports of Indian tobacco have increased by 32 per cent to 503 million dollars in 2007-08 from over 380 million dollars in the previous year. In terms of volumes, shipments rose 12 per cent to 2.03 lakh tons in 2008 from 1.81 lakh tons in the year-ago period," Babu said.

Mirroring high global prices, auction in Andhra Pradesh, a leading tobacco producing state, has seen an unprecedented rise in prices.

"The highest price for the best quality tobacco at auctions in Andhra Pradesh has shot up from Rs 65 a kg in 2007 to Rs 141 a kg in 2008 -- the highest ever since the Tobacco Board was set up," Babu said.

The price of average quality tobacco, too, hit a record at Rs 84.85 a kg, up from Rs 47.47 last year," Babu said.

Even prices of the lowest quality tobacco, inched up to Rs 50 this year from Rs 10 a kg in 2007 Babu added.