India's tobacco stocks tumbled Jan. 1, 2026, after a new cigarette tax hike took effect, raising duties by up to 8,500 rupees per 1,000 sticks.

After the government announced a new cigarette excise duty that would take effect on February 1, 2026, increasing taxes by 2,050 to 8,500 rupees per 1,000 sticks based on length, Indian tobacco stocks fell on January 1, 2026. The duty, which replaces the previous compensation cess and is added to the current 40% GST, is intended to lower smoking, which affects about 100 million people in India. Shares of ITC and Godfrey Phillips India fell precipitously, with ITC reaching a 21-month low and Godfrey Phillips having its worst day since 2022. This change, which is included in the Central Excise (Amendment) Bill 2025, raises the overall tax burden on cigarettes to roughly 53% of retail prices, which is less than the 75% benchmark that the WHO recommends. Along with new regulations for duty collection based on production capacity, the government also imposed a health and national security cess on pan masala.