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ITC, other tobacco firms to restart cigarette production in phases

KOLKATA: Cigarette makers led by market leader ITCBSE 0.70 % Ltd are going to resume production in a phased manner with packs having 85% pictorial warning to comply with the Supreme Court’s order, even as they say this will make a further dent on legal cigarette sales.

The new packs will have just 15% of the total area for branding and printing other details such as name of the factory, price and date of manufacturing, which ITC said will put its products at a disadvantage in the retail shelves since the illegally smuggled or locally produced tax-evaded packs will have very little or no warning at all. In a notice posted on the Bombay Stock Exchange on Sunday afternoon, ITC said its cigarette factories are commencing production progressively.

A company spokesperson later said: “ITC cigarette factories have resumed production in a phased manner with the specified 85% graphical warning pending hearing by the Karnataka High Court.”

The company had shut production on May 4, saying it was not in a position to comply with the Supreme Court order. The court had asked cigarette makers to produce packs with 85% pictorial warning until the Karnataka High Court passes its judgement on the fate of the various writ petitions filed by the industry challenging this requirement.

The apex court has asked the high court to pass its judgement within eight weeks. Previously, cigarette packs were required to carry graphical warning covering only 40% of the front of the pack. The Indian legal cigarette industry has been facing a continuous drop in demand because of high taxation and the growth of duty-evaded illegal cigarettes that do not carry pictorial warnings. Since 2012-13, the excise duty on cigarettes, at a per unit level, has gone up cumulatively by 118% with increase in taxation in every successive year.

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