India Hikes Tobacco Taxes from Feb 1; Cigarette Stocks Plunge

• India has notified new excise duty and health cess rules, making tobacco products more expensive from February 1.
• Cigarettes and tobacco will now attract a 40% GST, replacing the previous compensation cess, with biris taxed at 18% GST.
• Additional excise duty and a Health and National Security Cess will also apply to various tobacco and pan masala products.
• Following the announcement, major tobacco stocks like ITC Ltd and Godfrey Phillips India saw sharp declines, falling by approximately 6% and 10% respectively.
• Analysts predict higher retail prices (Rs 2-3 per stick) and squeezed profit margins for manufacturers, potentially dampening demand among India's 100 million smokers.

Why It Matters: New tobacco taxes effective Feb 1 will raise prices for smokers and hit manufacturers' profits.