Tobacco products to face 10-15 percent surge; cigarettes to cost more

Cigarette prices are set to go up for the fifth successive year in India with Finance Minister Arun Jaitley announcing 10-15 percent increase in excise duty for all tobacco products, except beedi in the 2016 Union Budget.

The announcement affected country's largest cigarette maker ITC Ltd., which crashed immediately falling by 3.13 at the Bombay Stock Exchange (BSE). The Sensex was down by 0.16 percent at that time.

Cigarette companies have borne the brunt of cumulative 98 percent increase in duties over the past four years. The industry and market was expecting a softer excise hike of 8-10 percent.

Last year, the Budget had announced 15-25 percent increase in cigarette and cigar prices. The industry has been lobbying to reduce taxes on cigarettes and ensure a level playing field with beedi and illegal cigarettes, while the Health Ministry had suggested imposition of tax on cigarettes.