The Centre’s move to make smokers pay a higher price for their vice by banning the sale of loose cigarettes hurt the shares of tobacco companies.
While ITC shares tumbled 5 per cent to ₹355.70, Godfrey Phillips fell 9 per cent to close the day at ₹2,965.95. Similarly, VST Industries slipped 2 per cent to ₹1,832.5 and Golden Tobacco dropped 7.6 per cent to ₹37.05 on the BSE.
The fall in share prices came after Minister of Health and Family Welfare JP Nadda told the Rajya Sabha on Tuesday that his Ministry had accepted the recommendations of an expert committee that proposed banning sale of loose cigarettes, increasing the minimum legal age for sale of tobacco products, and other recommendations.
A draft note for inter-ministerial consultations will now be circulated to amend the existing Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003.
Though the tobacco companies refused comment, observers say they may be getting ready for a change in the law.
According to a cigarette distributor based in Delhi, some companies are looking at producing smaller packets of cigarettes with about five sticks.
Besides potentially banning sale of loose cigarettes, the Centre is looking at increasing the minimum legal age for sale of tobacco products to 25 years, from the current 18. Further, the fine for smoking in public is also likely to be increased to at least ₹1,000 or more.
Anti-smoking groups hailed the Centre’s move.
“The proposal to forbid the sale of loose cigarettes and increase the age of sale on top of the government’s announcement of new health warnings is a demonstration of India’s global leadership and will save millions of lives and protect India’s youth,” said Matthew L Myers, President, Campaign for Tobacco-Free Kids.
But others pointed out that the move could boomerang. For instance, Shashank Gupta, a 26-year-old copywriter, is trying to kick the habit and for the last year or so, had been buying loose cigarettes, instead of packs of 10. If the Centre, indeed, enforces the ban on sale of loose cigarettes, Gupta and others like him will be forced to return to buying packs.