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Cigarette manufacturers cry foul

Cigarette majors ITC and Godfrey Philips came down heavily on the Govt for increasing the excise duty on cigarettes.

india Updated: Feb 28, 2006 16:28 IST
Press Trust of India
Press Trust of India

Cigarette majors ITC and Godfrey Philips came down heavily on the government for increasing the excise duty on cigarettes and said the five per cent hike should have been made applicable to the entire tobacco industry.

"Why should cigarettes be singled out for excise duty increase. All forms of tobacco products should be brought under excise duty," ITC Chairman YC Deveshwar said.

He said other forms of cigarette consumption, like chewing or 'beedi', should also have been covered under the excise duty hike.

Echoing similar views, Godfrey Philips' Ram Poddar said that prices of cigarettes could go up because of the government's decision.

"This (excise duty hike) will impact our profits as well as the growth of the cigarette industry. Price increase is the only way our balance sheets will be protected," he told PTI, though pointing out that any final comment on this would be made only after finer details of the Budget proposals had been studied.

Also, he questioned the reasoning for singling out cigarettes, saying they "constitute only 14 per cent of total tobacco consumption while the rest is through other routes, which are inferior in quality and give lesser earnings to the farmers and lesser overall revenues," Poddar said.

"It is not a progressive measure," he said, adding that it could cause an additional burden of Rs 350 crore on the cigarette industry.

First Published: Feb 28, 2006 16:28 IST