ITC to resume cigarette production
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Tobacco major ITC is going to resume production in a phased manner with its packs having 85% pictorial warning to comply with the Supreme Court's order, even as it says this will make a further dent on legal cigarette sales.The new packs will have just 15% of the total area for branding and printing other details such as name of the factory, price and date of manufacturing, which ITC said will put its products at a disadvantage in the retail shelves since the illegally smuggled or locally produced packs will have very little or no warning at all.
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In a notice posted on the Bombay Stock Exchange on Sunday afternoon, ITC said its cigarette factories are commencing production progressively. A company spokesperson later said, "ITC cigarette factories have resumed production in a phased manner with the specified 85% graphical warning pending hearing by the Karnataka High Court."The company had shut production on May 4, saying it was not in a position to comply with the Supreme Court order. The court had asked cigarette makers to produce packs with 85% pictorial warning until the Karnataka High Court passes its judgement on the fate of the various writ petitions filed by the industry challenging this requirement.
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The apex court has asked the high court to pass its judgement within eight weeks. Previously, cigarette packs were required to carry graphical warning covering only 40% of the front of the pack. The Indian legal cigarette industry has been facing a continuous drop in demand because of high taxation and the growth of illegal cigarettes that do not carry pictorial warnings. Since 2012Â, the excise duty on cigarettes, at a per unit level, has gone up cumulatively by 118% with increase in taxation in every successive year.