This decision is followed by Centre's notification that tobacco products manufactured from Friday onwards will carry larger pictorial warnings covering 85% of the display area on the packet
Tobacco product manufacturers in India on Friday decided to shut down factories with immediate effect citing 'ambuguity' in pictorial warning policy.
This included top manufacturers such as ITC Ltd, part-owned by British American Tobacco, Godfrey Philips and VST which suspended production on Friday over what they said was ambiguity in the government's new health warning rules for packs, a leading industry body said.
This decision is followed by Centre's notification that tobacco products manufactured from Friday onwards will carry larger pictorial warnings covering 85% of the display area on the packet.
The move will result in estimated daily loss of Rs 350 crore in production turnover for the Indian tobacco industry.
Tobacco Institute of India whose members account for 98% of domestic sales of duty paid cigarettes.
The members of The Tobacco Institute of India (TII), who account for more than 98% of the country's domestic sales duty-paid cigarettes, said they are unable to continue manufacturing cigarettes and fear potential violation of rules if they continue production. The shutdown is effective April 1, 2016.
Mahmood Ahmad, director, TII, said that the Indian tobacco industry had written to Ministry of Health & Family Welfare on March 15, 2016 to seek clarification on the matter.
Thought there are large stocks of cigarettes which could last a couple of weeks if production is halted. However, if the halt in production continues it could be a problem. Retail prices are also expected to rise if retailers sense shortage and could also lead to customers moving to buy illegal cigarettes.
India was last year forced to delay implementation of stringent pack warning rules as a parliamentary panel sought time to assess how the industry would be impacted.
The Health Ministry's notification of September 24, 2015, for implementation of the Cigarettes and Other Tobacco Products (Packaging and Labelling) Amendment Rules, 2014, prescribing larger pictorial warnings on tobacco products came into force from Friday.
Notwithstanding a parliamentary panel's recommendation which had described the government's proposal as "too harsh" and wanted a drastic reduction in the size of the visual warning, the Centre went ahead with the larger pictorial warnings.
The Parliamentary Committee on Subordinate Legislation had recommended that the message occupy 50% of the space.
"The committee is of the view that in order to have a balanced approach, the warning on cigarette packets should be 50% on both sides of the principal display area instead of 85% of the principal display area as it will be too harsh and result in the flooding of illicit cigarettes in the country," the committee said in the report.
The stand had evoked sharp criticism from MPs and health experts. In its report submitted to Lok Sabha, committee chairman Dilip Gandhi justified the recommendations, saying it was urged that the size of the warnings be increased from the present 40 to 50%.
The ministry had made a commitment to the Rajasthan High Court on March 28 that it will implement the said rules from April 1, 2016.
(With inputs from Reuters and PTI)
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