Those in love with their cigarettes can breathe easy. They may continue to smoke away as usual on their usual brands and may not even downgrade to other brands. The impact of the excise hike on cigarettes seems quite limited.

“I didn’t foresee much of a price rise this time in the Budget. And frankly, I’m relieved,” says Debraj Ghosh, a 35-year-old MNC employee.

The impact seems to be quite limited.

Excise duty is to the tune of ₹5 per 1,000 cigarettes for sticks below 75 mm (that include 64 mm, 69 mm, 74 mm). And the duty is ₹10 per 1,000 sticks for sticks above 75 mm.

“This implies a price hike of 0.05 paisa per stick of below 75 mm and of 1 paisa per stick above 75 mm,” says Abneesh Ray, Executive Vice-President, Edelweiss Securities.

If translated into price per pack of 20 sticks, then the increase in per box / pack should ideally be in the range of 10-20 paise, depending on the stick size. According to Ray, this levy is to plug “some legal loopholes” and so it may not be viewed as a “structural negative”.

Minimal impact

“There’s not much impact on cigarette prices so far. I don’t know if changes will be made later,” said Baishnab Pal, who runs his own business.

Ram Sewak, who runs a cigarette shop in the busy central business district (also called Dalhousie) of Kolkata, too does not think there will be an impact on demand.

He points out that people who opt for premium brands will stick to it, irrespective of price hikes.

Some smokers downgrade or switch between brands and different sized sticks as prices go up.

“I have clients who have stuck to Classic (a cigarette brand) for years now, whatever be the price.

On the other hand, there are some who moved to Navy Cut from, say, Gold Flake.

But this time the price hike, if any, may be too small to notice,” he said.

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