The Union Cabinet on Wednesday decided to ban production, import, distribution and sale of electronic cigarettes. And on Thursday, an ordinance to ban e-cigarettes was issued making production, import, export, transport, sale or advertisements of such "alternative" smoking devices a cognizable offence attracting jail term and fine.
While the Finance Minister Nirmala Sitharaman claimed that e-cigarettes and similar products as they pose health risk to people, especially the youth. But she forgot to mention that it benefited the Government of India. How? According to the Indian Express, the Centre holds stake, directly and through government held entities, in at least two of the listed companies with exposure to the tobacco business — ITC Ltd and VST Industries Ltd.
On Wednesday, share prices of most of the tobacco firms witnessed a surge after the Cabinet decision. The Indian Express's report further states that, "since these companies are seen to gain the most from the move, the government recorded notional gains of around Rs 1,000 crore over the course of Wednesday’s trade."
Cigarette stocks gained up to 5.5 per cent on Wednesday after the Cabinet approved an ordinance for banning production, import, distribution and sale of electronic cigarettes. Shares of Godfrey Phillips India jumped 5.55 per cent and Golden Tobacco climbed 4.69 per cent on the BSE. Likewise, VST Industries rose by 3.43 per cent and ITC gained 1.03 per cent.
According to Indian Express, share prices of ITC Ltd, in which the government and its entities own 28.64 per cent stake, rose 1.03 per cent, or Rs 2.45 apiece, to close at Rs 239.60 apiece Wednesday. While it holds 7.96 per cent stake in ITC through the Specified Undertaking of Unit Trust of India (SUUTI), state-owned insurer LIC holds 16.32 per cent stake in the company.
The report further states that General insurer GIC, New India Insurance and Oriental Insurance own an aggregate of 4.36 per cent in the company. The notional gain for these state-owned firms put together on Wednesday works out to around Rs 859 crore. The Indian Express further states that share prices of VST Industries rose Rs 58.15 apiece to close at Rs 3,560 apiece. Given that New India Assurance Company holds around 1.53 per cent stake in VST, the share movement translated into a notional gain of Rs 137.07 crore for state-owned New India Assurance.
Sitharaman, who had headed a Group of Ministers (GoM) on the issue, said the Cabinet decided to ban e-cigarettes and similar products as they pose health risk to people, especially the youth. First time violators will face a jail term of up to one year and a fine of Rs 1 lakh. For subsequent offences, a jail term of up to three years or a fine of Rs 5 lakh, or both according to the ordinance. The storage of e-cigarettes shall now be punishable with imprisonment of up to six months or a fine of up to Rs 50,000 or both.
The ordinance also allows authorised officials to conduct searches in premises stating that where such searches are not permissible, authorities may attach properties, stocks of e-cigarettes or records maintained by the manufacturer, producer exporter, transporter, importer, stockist against whom a complaint has been made. It also said that that the owner or occupier of the place which stock of e-cigarettes shall voluntarily prepare a list of such stock in his possession and without delay submit the stock to the nearest authorised officer.
However, e-cigarettes promoting trade bodies, users and other stakeholders slammed the government's move to ban "alternative" smoking device through the ordinance route, alleging it was a "draconian" step taken in haste to protect the conventional cigarette industry. Association of Vapers India (AVI), an organisation representing e-cigarette users, also alleged that it is a black day for 11 crore smokers in India who have been deprived of safer options.
(Inputs from Agencies)
