Finance Minister Arun Jaitley chose to further tax smokers by increasing excise duty on cigarettes by 25% for sticks not exceeding 65 mm and by 15% for all other stick lengths.
Premium filtered cigarette sticks are of 84 mm length.
The news sent cigarette stocks down with ITC Ltd recording 7.3% drop and VST Industries clocking 3% drop, reported Reuters.
ITC, the manufacturers of the Wills and Gold Flake brands, has emerged as a conglomerate with a diverse set of business, ranging from hospitality to food items, with cigarette revenue contributing to lower than half of total revenue.
While cigarette demand is relatively inelastic, higher taxes cut into volume growth and forces diversification pace increase.
The comparative cost on health care must also be noted, as smoking cigarettes have been directly linked to heart and lung diseases, cancer and heart attacks.
