India Hikes Cigarette Excise Duty

The India — Ministry of Finance (India) has announced a major overhaul of the excise duty structure on cigarettes and other tobacco products, effective February 1, 2026. This marks the first significant revision since the Goods and Services Tax (India) rollout in 2017. The new structure reintroduces a specific central excise duty, ranging from INR 2,050 to INR 8,500 per 1,000 sticks, based on cigarette length and type, in addition to the existing GST. The government has also withdrawn the GST compensation cess on tobacco products and rationalized GST slabs. This move aims to curb tax evasion, increase government revenue, and align India's tobacco pricing policy with global public health recommendations, such as those from the World Health Organization. Manufacturers like ITC Limited and Godfrey Phillips India are expected to pass on these increased costs to consumers, leading to higher retail prices and a negative impact on their stock performance.