Indian Tobacco Stocks Slide After Government Imposes Fresh Cigarette Tax
Shares of major Indian tobacco companies fell sharply on Thursday after the government announced a new excise duty on cigarettes, a move that is expected to raise prices for nearly 100 million smokers across the country. Market leader ITC dropped 4.4%, while Godfrey Phillips India, which distributes Marlboro cigarettes in India, declined 7.7% following the announcement.
ITC shares hit their lowest level since June 2024 and were headed for their steepest single-day fall since February 2022. The stock was the top drag on the Nifty 50 index and also led losses in the FMCG sector, which was trading notably lower. The finance ministry has notified an excise duty ranging from 2,050 rupees to 8,500 rupees per 1,000 cigarette sticks, depending on length, effective February 1.
Analysts estimate the new duty will increase overall cigarette costs by 22% to 28% for popular variants, on top of the existing 40% Goods and Services Tax. Cigarettes longer than 75 mm, which form a significant portion of ITC’s portfolio, may see price hikes of 2–3 rupees per stick. The move aligns with the government’s broader efforts to curb smoking through higher taxes, stricter regulations, and health warnings, following the approval of the Central Excise (Amendment) Bill 2025 in December.
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