More Stories

Informist, Friday, Apr. 10, 2026

 

--Sources: Cigarette sales fall 3-5% in Mar, down further in April

--CONTEXT: Govt raised GST on cigarettes to 40?b, from 28%

--Sources: Cigarette sales fall steepest in East India in Mar-Apr

--Sources: Mini King size cigarettes sales volume worst affected in Mar-Apr

 

By Avishek Rakshit

 

 

KOLKATA - Cigarette sales in major metropolitan cities of the country fell 3-5% in March and continued the fall further in April, following the sharp hike in prices after the government raised taxes substantially in February, industry officials said. 

 

Sales declined 5% in East India, the largest tobacco consuming region, followed by a 4?ll in the West India, and over 3% in north India, industry officials said. Sales declined by 3% in south India. Although officials said that it was difficult to fathom the overall decline pan-India, considering the shift in consumption patterns, it is estimated that overall cigarette sales in the country, including non-metros, declined around 3.5% in March and is set to decline further in April. 

 

In the cigarettes industry, even a 1% sway translates into substantial gains or losses for cigarette makers and distributors as cigarettes are priced much higher in India compared with countries like China, Russia, and the Central African region. 

 

A standard Mini Kings sized cigarette--70 mm to 72 mm--is now priced at INR 12-INR 14 in India, depending on the brand and a Kings sized cigarette--84 mm--is now priced at INR 24. Comparatively, in Russia, a King-sized stick sells for around Russian Ruble 8.5 which is equivalent to around INR 10, and in China, a King-sized stick is priced at Chinese Yuan 1 which is equivalent to INR 13.5.

 

Roughly, around 2.4 billion tax-paid cigarette sticks are sold across India every month and industry officials estimate a sizeable volume of non-duty paid cigarettes, priced lower, is also sold across the country every month.

 

In February, to discourage smoking and bring the tax on cigarettes close to World Health Organization's recommendation of 75%, the government increased the goods and services tax on cigarettes to 40% from the earlier slab of 28% and also introduced a new Excise Duty range of INR 2,050-INR 8,500 per 1,000 sticks on cigarettes. Effectively, it pulled up the net tax on cigarettes to 60-70?pending on the length from the previous 50-55%. 

 

The government's move led the country's largest cigarette maker, ITC Ltd.--which has a 70% market share in the legal cigarettes industry--and Godfrey Phillips India Ltd.--the second-largest cigarette maker in India--to hike prices between 21% and 41?pending on the cigarette brand. 

 

For instance, a 10-stick pack of Gold Flake Kings or Classic is now priced at INR 240 from the earlier INR 170 and a 10-stick pack of Wills Navy Cut--a bestseller in east India--is now priced at INR 140 from the earlier INR 110. Gold Flake Premium--the go to brand of the lower middle income group in the country--saw price increase to INR 115 from the earlier INR 95 for a 10-stick pack.

 

"The impact is more predominant in the Mini Kings category where sales have been seriously hit. Sales in the Kings category is also down, but not as steep as the Mini Kings," said Gopal Singh, proprietor at Mahakali Traders which distributes cigarettes in Kolkata. 

 

The pattern of Mini Kings bearing the brunt of a sharper decline in sales is predominantly the same across India but the degree of decline varies. While it is the steepest in the eastern region, the decline is comparatively less in the southern markets, industry officials said. 

 

Cigarette makers like ITC Ltd. have maintained that when taxes are stable, cigarette sales remain stable as well, but a sudden price increase often leads the legal cigarettes industry to shrink in size and the illicit trade grows at the cost of the legal industry.

 

"There is a high probability that a cigarette smoker may not quit even after prices increase steeply," an industry official said. "There are high chances that the person may either downgrade his or her brand or move over to consuming non-tax paid cigarettes which are illegal."

 

New smokers have been preferring new packs and sizes like the slim cigarettes--100 mm-120 mm--instead of the traditional King and Mini King sizes prompting cigarette companies to experiment with new products and roll out differentiated ones under successful mother brands. For instance, ITC rolled out Gold Flake Social under the Gold Flake mother brand and also introduced low smell cigarettes christened Classic Alphatec under the Classic mother brand. ITC characterised new launches and differentiated products as one of the key sales growth drivers for its cigarettes business for the past several quarters. 

 

"Innovative and new products were doing well and sales were growing every quarter under a stable tax regime. But with such a price hike, sales are bound to fall now," Anjan Sen, owner of cigarette distribution firm, Riddhi Siddhi Tobacco Pvt. Ltd. said.

 

ILLICIT TRADE TO GET BOOST?

Industry officials and cigarette distributors fear that a steep price hike, which has practically rendered the King-sized cigarettes unaffordable for the middle-income group, may promote growth in illicit trade.

 

"Consumers will definitely look for alternatives. Some will downgrade into more affordable price points but there is an extent till which one can downgrade. It is impractical to think that someone who was consuming King-sized premium cigarettes will scale down to budget brands," Sen said. 

 

As a result, a large section of consumers will look at alternatives like cigarettes smuggled in from abroad. Several brands from Malaysia, Myanmar, Bangladesh, Argentina and other countries are widely available in India at prices which are much lower than the products sold by ITC and Godfrey Phillips, Sen said. For instance, the Peacock brand of cigarettes, manufactured in Myanmar, is widely available in east India at prices of INR 8-INR 12 per King sized stick. 

 

Industry officials said that India is already the fourth largest illicit cigarette market in the world and non-duty paid cigarettes currently account for over 26% of the total Indian cigarette market. "This percentage is likely to grow further now. On the one hand, companies who sell duty-paid cigarettes will lose sales to the illicit trade and (on the other hand) the government will lose tax revenue," the industry official quoted previously said.

 

According to The Tobacco Institute of India, a representative body of farmers, manufacturers, exporters and ancillaries of cigarettes in India, availability of international smuggled cigarettes has spread all over the country as retailers benefit enormously by pushing sales of these cigarettes due to higher trade margins. 

 

Illegal cigarettes, which are basically non-tax paid cigarettes, are extremely cheap due to tax evasion affording a huge arbitrage opportunity and are widely available across all parts of the country including urban and rural locations.

 

Smuggled cigarettes are particularly popular among the youth as they carry international brand names and are cheaper than Indian brands, Tobacco Institute of India said in a report. It added that profits from cigarette smuggling have been used to fund criminal and terrorist activities that pose a threat to national security. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.