ITC again halts production

| May 6, 2016

The introduction in India of bigger tobacco-pack health warnings has seen a number of false starts and U-turns; the latest of which has caused ITC once again to shut its manufacturing plants, according to a Reuters report.

The government issued a notification on October 15, 2014 requiring the printing of graphic health warnings on tobacco packs covering 85 percent of each of the two main surfaces. But the policy kept being referred to a parliamentary committee that recommended in March that, instead, the warnings should be set at 50 percent.

The government, however, decided at the end of March to go ahead with its requirement for 85 percent warnings to be included as from April 1.

ITC, India’s dominant cigarette manufacturer, announced on April 2 that it had halted production at its cigarette factories because it was not ready to print the bigger, graphic warnings on its cigarette packs. The company said that its factories would be shut till clarity emerged on the matter.

The country’s other manufacturers also halted production on April 1 and bidi manufacturers followed their lead sometime later.

ITC said on April 2 that because the question of the legality of the new warnings had been and continued to be pending before the courts, it had not committed to investing substantial resources in creating the large number of printing cylinders and other tools necessary for a change to the warnings. The implementation of health-warning changes was an elaborate process entailing months of preparation and involving substantial costs.

‘Since the matter of new health warning was under the Parliamentary Committee’s consideration, and the government had itself held out that it would await the committee’s report, the industry was led to believe that the government would re-notify new health warnings after considering the committee’s recommendations,’ the company said.

The upshot of this situation was said to be that the licit tobacco industry was facing losses of more than Rs3,500 million a day and the illicit industry had taken about a 90 percent share of the cigarette market. In addition, the livelihood of more than 45 million people engaged in the tobacco industry across India was said to be under threat.

To add to the distress and confusion, some authorities in India started to confiscate from retail outlets tobacco products that in their view did not meet the new requirements, even though the requirement was only that the new warnings had to be included on packs manufactured from April 1.

Production had been restarted because the warnings requirement was the subject of court challenges, but India’s top court told tobacco companies on Wednesday that they must adhere to the new federal rule requiring the larger health warnings on cigarette packs.

The court transferred all petitions by cigarette manufacturers pending in various courts to the Karnataka High Court for further hearing.

ITC said in a statement this week that it had had to shut its cigarette factories from May 4 until it was in a position to comply with the ‘interim requirements pending hearing in the Karnataka High Court’.

Category: Breaking News

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