InvestorQ : Why is the new draft policy by the government considered to be negative for the cigarettes business of ITC?
Dhwani Mehta made post

Why is the new draft policy by the government considered to be negative for the cigarettes business of ITC?

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Dilmini Mercia answered.
2 weeks ago
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Even before the new cigarette policy has been put out for comments by the government, ITC has been under pressure. However, the proposed policy has only heightened the risk. The Indian government proposed a new policy paper on the cigarette industry, which could have fairly long term negative implications for the sector.

Now the question is what would be these restrictions and how serious are they? The government will begin by imposing severe restrictions on the sale and consumption of cigarettes in India. You would possibly recollect that what the government made its lockdown announcement, cigarette sales took a sharp hit as loose sales were banned.

This is one of the inclusions in the new bill. As per the new bill, the government is planning to increase the minimum legal age for smoking from the current 18 years to 21 years of age. One can argue that this will be tough to implement and could lead to a lot of harassment of the general public, but the government appears to be quite serious.

In addition, the proposed bill will also put a blanket ban on sale of loose cigarettes at various tobacconist shops. That means; all tobacconist shops can only sell sealed packs the same way as they can be sold in other retail stores too. This would also be tough to implement and monitor and it will also be prone to rampant misuse. \

Last but not the least, the Indian government has also proposed in the draft paper to fully ban smoking in public places. As of now smoking is only banned in public places like parks, restaurants, hotels, malls etc. This is in line with most developed foreign countries which have allocated specific zones for smokers at public places. That could be the new norm.
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