Indian tobacco stocks fall after new tax on cigarettes
Photo: Reuters
Shares of Indian tobacco companies fell on Thursday after the government imposed a new tax on cigarettes, making them costlier for an estimated 100 million smokers in the world's most populous country.
ITC, maker of Gold Flake and the market leader, dropped 4.4%, while Godfrey Phillips India, the distributor of Marlboro in the country, declined 7.7%, News.Az reports, citing Reuters.
Shares of ITC were trading at 385.25 rupees, their lowest level since June 2024, and were also on track for their worst day since February 2022.
ITC was the biggest loser on the Nifty 50 index and also led declines on the FMCG index , which was trading 1.6% lower.
The finance ministry late on Wednesday notified an excise duty of 2,050–8,500 rupees ($22.82–$94.60) per 1,000 sticks, depending on cigarette length, effective February 1.
Health issues tied to smoking are seen as a major drain on India's resources, and the government has introduced steps, including larger warning labels and periodic tax adjustments, to curb consumption.
The duty translates into a 22%-28% increase in overall costs for 75-85 mm cigarettes, analysts at ICICI Securities said.
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