Shares of Indian tobacco companies fell on Thursday after the government imposed a new excise duty on cigarettes, increasing their cost for around 100 million smokers. ITC, the market leader, saw a decline of 4.4%, while Godfrey Phillips India dropped 7.7%. ITC shares reached 385.25 rupees, marking their lowest point since June 2024 and their worst performance since February 2022.
The new excise duty ranges from 2,050 to 8,500 rupees ($22.82 to $94.60) per 1,000 sticks, depending on cigarette length, and will take effect on February 1. Analysts estimate this could lead to a 22%-28% increase in costs for certain cigarette types, as well as a potential retail price rise. The tax is in addition to the existing 40% Goods and Services Tax. The announcement follows the prior approval of the Central Excise (Amendment) Bill 2025, replacing a temporary levy on tobacco products.
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