New Delhi, Nov 25: ITC shares fell nearly 7 per cent to a day over concerns of tough tobacco policy of the health ministry, which accepted the recommendation of an internal panel to ban the sale of loose cigarettes.
According to reports, the Union health ministry on Tuesday has recommended a ban on sale of loose cigarettes and also increase in the minimum age of a person to whom tobacco products can be sold.
Health Minister JP Nadda in a written reply in the Rajya Sabha said the ministry has accepted the recommendations of the committee, which was formed by the ministry, to review Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COTPA).
Nadda through a written statement said the expert panel has recommended “prohibition on sale of loose or single stick of cigarette, increasing the minimum legal age for sale of tobacco products, increasing the fine or penalty amounts for violation of certain provisions of the Act as well as making such offences cognizable”.
Nadda said the ministry has accepted the committee’s recommendations and a draft note for the cabinet has been circulated for inter-ministerial consultation.
The recommendations will now be put before the Cabinet and will require a Parliament nod before they are implemented.
It may be noted that nearly 70 per cent of all sales are from loose cigarettes as many cannot afford to buy a packet of 10 cigarettes at an average Rs 190.
Analysts are of the opinion that new policy would hit the sales by 10 to 20 per cent. The cigarette industry contributes Rs 25,000 cr in tax revenue, but health concerns are expected to override the loss from that.
All tobacco companies reportedly traded with deep cuts after the news broke. ITC, India’s biggest cigarette maker, fell nearly 7 per cent to a day low of Rs 348.65.
ITC is also the most influential stock in the blue chip Nifty index, so the selloff led to further losses in the broader markets.
(With Agency Inputs)