Cigarette prices set to jump as India rolls out new tobacco tax

Business Jan 01, 2026

India just passed a new law that will hike cigarette prices by 15-20% from February 2026, thanks to an extra excise duty on top of the current 40% GST.
The aim? To curb smoking among the country's estimated 100 million smokers.

Market reacts: ITC shares take a hit

The news rattled the stock market—ITC, India's biggest cigarette maker, saw its shares drop by 10%, their sharpest fall in six years.
Godfrey Phillips also crashed as much as 19%, as investors worry about fewer sales with higher prices.

Industry voices concerns over illegal sales

Tobacco companies warn that higher taxes could push more people toward illegal cigarettes, which already make up about a quarter of all sales.
They're also worried about the impact on farmers and small retailers who rely on this industry for their livelihood.