Major cigarette manufacturers including ITC, Godfrey Philips and VST have decided to shut all their factories and stop manufacturing with effect from Friday in the wake of larger pictorial warnings covering 85 per cent of the packaging space coming into force.
The companies, which are members of Tobacco Institute of India, who account for more than 98 per cent of the country's domestic sales of duty paid cigarettes in India claimed the estimated production revenue loss of over Rs 350 crore per day for the tobacco product manufacturers.
"Owing to ambiguity on the policy related to revision of Graphic Health Warnings on tobacco product packs, the members are unable to continue manufacturing cigarettes from April 1, 2016," Tobacco Institute of India (TII) said in a statement.
TII Director Syed Mahmood Ahmad said Indian tobacco industry had written to Ministry of Health and Family Welfare on March 15, seeking clarification on the matter.
Fearing, potential violation of rules by continuing production, TII members have decided to shut their factories, the statement said.
"The move will result in an estimated loss of Rs 350 crore per day in production turnover for Indian tobacco industry," it said.
The notification by Health Ministry on September 24, 2015, for implementation of the Cigarettes and Other Tobacco Products (Packaging and Labeling) Amendment Rules, 2014, comes into force from today. These prescribe larger pictorial warnings on tobacco products.
The ministry had made a commitment to Rajasthan High Court on March 28 that it will implement the said rules from April 1, 2016.
The Parliamentary Committee on Subordinate Legislation had described as "too harsh" the government's proposal that 85 per cent of the packaging surface carry pictorial warnings and recommended that the message occupy 50 per cent of the space.
The stand had evoked sharp criticism from MPs and health experts.
TII said, "the extreme 85 per cent warnings will promote illegal cigarette trade and adversely affect the livelihood of 45.7 million people dependent on tobacco which included farmers, labour, workers, trade and others."
It further claimed that "illegal cigarettes account for one fifth of the total cigarette industry resulting in annual revenue loss of Rs 9,000 crore to the national exchequer."