The bans on various oral tobacco-containing products, such as gutkha, which have now spread to at least 11 Indian states, are likely to be ‘positive’ for cigarette companies, according to a story in The Times of India quoting tobacco analysts.
The bans have been brought in under the Food Safety Standards Authority of India, which bans all ‘food products’ with tobacco or nicotine.
There are no state bans on loose tobacco or smoking tobacco products.
“We see this as a positive for cigarette companies considering the hike in excise and VAT rates in recent central and state budgets on bidi and gutkha,” analysts at the brokerage firm, Anand Rathi, were quoted as saying.
Cigarettes account for about 15 per cent of tobacco consumption inIndia, while bidis account for 35 per cent and smokeless tobacco for the rest.
“We expect low-end [cigarette] brands to benefit,” the analysts said. “Also, we estimate the new cigarette of 64-mm to command higher volumes, finding favour with former gutkha consumers.”