Shares of cigarette and tobacco product makers such as VST Industries, Godfrey Phillips and ITC continued to drop on Friday, January 2, 2026, even as stock benchmark indices Sensex and Nifty began the trading session on an optimistic note amid steady buying by domestic institutional investors in the morning. While shares of ITC tumbled 5.11 per cent to Rs 345.35, its 52-week low, on the BSE, the stock of Godfrey Phillips India declined 4.58 per cent to Rs 2,184.60. Similarly, shares of VST Industries also dipped by 2.56 per cent to Rs 248.60. However, the share of Elitecon International opened gap up with a gain of 2.4 per cent at Rs 104.90 against the previous close of Rs 102.44.
Why are these shares falling?
Shares of cigarette and tobacco product manufacturing companies are under pressure after the government imposed an additional excise duty on such products effective February 1.
The finance ministry has notified amendments to the Central Excise Act imposing an excise duty of Rs 2,050-8,500 per 1,000 sticks based on cigarette length, effective February 1. This duty will be in addition to the 40 per cent GST. The revised tax structure replaces the existing regime of 28 per cent GST, along with a compensation cess on tobacco and related products.
Why did shares of Elitecon International gain in early trade?
Elitecon International's share has defied the trend due to its export-led model. Under the Goods and Services Tax, tobacco exports in India are zero-rated. As the company is mainly into export, sending its products to over 50 countries, it is not impacted by the new excise duty announced by the government.
The company's global contract
In December 2025, the company secured a two-year export contract worth Rs 875 crore (USD 97.35 million) with Yuvi International Trade FZE.
Moreover, the company is also expanding its footprint in the FMCG sector and recently acquired majority stakes in Landsmill Agro and Sunbridge Agro.
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(This article is for informational purposes only and should not be construed as investment, financial, or other advice.)
