ITC Ltd, India’s largest cigarette maker, has shut down its cigarette production with the company weighing the future course of action whether to comply with the Supreme Court’s order of printing pictorial warning against tobacco consumption covering 85 per cent of cigarette pack in the interim period or wait for the Karnataka High Court to decide on the fate.
In a notice to the stock exchanges, ITC said, “It had to shut its cigarette factories from May 4 until the company is in a position to comply with the interim requirements pending hearing in the Karnataka high court”. This is the second time since April that ITC has decided to shut production.
The Supreme Court on Wednesday had told tobacco makers of their ‘duty to society’ and to carry pictorial warnings spread over 85 per cent of both sides of their packaging as mandated by the government.
The apex court passed an order transferring to the Karnataka High Court all writ petitions pending in various courts challenging the rule.
India’s tobacco industry and the government are tussling over the regulations, which require that pictorial warnings cover 85 percent of a pack’s surface, up from 40 percent of just the front panel. At the same time, a prolonged industry closure could hurt government revenues, since taxes constitute as much as 60 percent of the selling price of cigarettes in India.
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 per cent with increase in taxation in every successive year.