India’s biggest cigarette maker ITC Ltd shut its plants from May 4 to comply with a new stipulated pictorial warnings rule issued by the federal government. India’s top court told tobacco companies that they must adhere to a new federal rule requiring much larger health warnings on cigarette packs, in a major setback for the $11 billion industry. The court also transferred all petitions by cigarette manufacturers pending in various courts to the Karnataka High Court for further hearing. The companies had objected to the new federal rules.

• 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.
• As a result, legal cigarettes today represent only 11% of tobacco consumption in India.
• As per estimates, the industry is down from 110 billion sticks sold per year to 95 billion sticks a year.