Modi government on Wednesday (September 18) announced a complete ban on e-cigarettes, citing the risk they posed to India’s youth. On the other hand, the government owns 28% stake in ITC, India’s biggest cigarette maker.
E-cigarettes ban in India is due to growing fears over the health risks posed by vaping, sending shares of conventional cigarette makers soaring.
Manufacture, import, sale and advertisements of e-cigarettes have been made a cognizable offence.
Finance Minister Nirmala Sitharaman, citing a US report, said students are driving up e-cigarette sales.
The Union cabinet has made the manufacture, import, sale, distribution and advertisements of e-cigarettes a cognizable offence, Nirmala Sitharaman said after a Cabinet meeting in New Delhi on Wednesday, September 19.
In a landmark decision, #Cabinet approves proposal to ban all forms of e-cigarettes including Electronic Nicotine Delivery Systems, Heat Not Burn Products, e-Hookah & the like devices in the country with immediate effect.#SwasthaBharat #CabinetDecision #ecigarettes #vaping pic.twitter.com/0RhrZMcH0o— Ministry of Health (@MoHFW_INDIA) September 18, 2019
However, it is a little known fact that the central government is a shareholder in the largest domestic manufacturer of conventional cigarettes (ITC), which have been proven to cause cancer and other diseases.
E-cigarettes banned, says Finance Minister Nirmala Sitharaman – Shd this not come from Min of Health? How about banning gutka too? How about MoF announcing some fiscal measures to revive economy? https://t.co/9c4hpRlUUD— Kiran Mazumdar Shaw (@kiranshaw) September 18, 2019
This makes India’s government perhaps the only one in the world with a stake in a cigarette company, and raises questions about a potential conflict of interest in the ban on e-cigarettes.
The government and state-owned companies together held a 28.64% stake in ITC as of June end.
The Centre on its own had a 7.96% stake through the Specified Undertaking of the Unit Trust of India (SUUTI), the administrator that manages the funds of the erstwhile Unit Trust of India (UTI) on behalf of the government.
In addition, many state-owned insurance companies are also shareholders in ITC, with the Life Insurance Corporation (LIC) owning the largest stake at 16.3% as of June.
The General Insurance Corporation, meanwhile, has a 1.73 per cent stake, the New India Assurance Company 1.52%, and the Oriental Insurance Company, 1.11%.
ITC draws as much as 80% of its profits from cigarettes, sold under popular brands like Classic, Goldflake, Capstan and Navy Cut.
The government’s ban on e-cigarettes, announced late Wednesday afternoon, saw stocks of cigarette manufacturers rising in the closing hour of trade.
While ITC’s stock ended 1.03% higher at Rs 239.6 on the BSE, tobacco companies Godfrey Phillips India Ltd and Golden Tobacco saw their stocks close at Rs 990.95 (rise of 5.55%) and Rs 31 (rise 3.85%), respectively.