India stubs out e-cigarettes over health risks
Cabinet clears ordinance to ban these devices after several vaping-related deaths; ITC, Godfrey stocks up.
The Cabinet on Wednesday cleared an ordinance to ban the production, import, export, distribution, sale, storage and advertisements of electronic nicotine delivery system, or e-cigarettes.
The ban is expected to benefit traditional cigarette companies such as ITC and Godfrey Phillips that were facing competition from e-cigarettes. On Wednesday, shares of ITC rose 1% on the BSE to close at Rs 239.60, while Godfrey Phillips rallied 5.6% to Rs 990.95 and VST Industries gained 1.7% to Rs 3,560, all outperforming the benchmark Sensex that ended 0.23% higher.
The government decision will adversely impact plans of vaping products companies such as Juul Labs and Philip Morris International that were looking to invest in India.
“Considering the seriousness of the impact of e-cigarettes on the youth, the Cabinet has approved an ordinance to ban e-cigarettes,” finance minister Nirmala Sitharaman told the media.
Up to 3-Yr Jail for Violations
Those violating provisions of the law face imprisonment of up to three years, along with monetary penalty.
All e-cigarette devices and consumable stocks must be deposited with the police once the law comes into force.
The move comes just a week after US President Donald Trump proposed a ban on flavoured e-cigarettes. On Tuesday, New York became the second US state after Michigan to ban flavoured e-cigarettes, following several vaping-linked deaths that have raised fears about a product long promoted as less harmful than smoking.
The Association of Vapers India (AVI), an organisation representing e-cigarette users, called the decision draconian and a black day for smokers.
“On one hand we talk about transitioning from a developing to developed nation, and on the other we are closing doors to new technology that has been embraced globally by governments and used by millions worldwide to quit smoking,” said Samrat Chowdhery, a director and harmreduction advocate at AVI. He alleged that the government was protecting its stake in the country’s top cigarette producer, ITC.
The government holds a nearly 8% stake in ITC, worth over Rs 23,000 crore, through the Specified Undertaking of the Unit Trust of India. State-run insurance companies led by LIC hold another nearly 21% in the conglomerate that got 46% of its gross fiscal 2019 revenue from cigarette sales.
ITC spokesperson was unavailable to comment immediately.
ITC, too, is selling an e-cigarette brand, Eon, in the states where it was not already prohibited, the company’s latest annual report showed.
There have been other critics too of the government decision.
Bizarre move for some
“Why ban when you can tax (heavily)? Banning #ecigarettes while keeping tobacco products is bizarre. Neither health nor fiscal grounds for this decision, so what’s the logic,” tweeted Shamika Ravi, a member of the Prime Minister’s Economic Advisory Council.
Bhavna B Mukhopadhyay, the chief executive of the Voluntary Health Association of India, lauded the government move, saying that e-cigarettes posed health risks that were similar to those of conventional cigarettes. “They are being marketed as a harm-reduction product, which is contrary to the truth,” Mukhopadhyay said.
India has more than 10 crore adult smokers, second only to China in the world, making it a lucrative market for firms such as Juul and Philip Morris.
Juul had plans to launch its ecigarette in India, while Philip Morris was reported to be looking to launch a heat-not-burn smoking device in India.
Banning alternative smoking devices like e-cigarettes, heat-not-burn smoking devices, vape and e-nicotine flavoured hookahs was on top of the Narendra Modi government’s first 100-day agenda in its second term.
Any production, manufacturing, import, export, transport, sale (including online sale), distribution or advertisement (including online advertisement) of e-cigarettes shall be a cognisable offence upon promulgation of the Ordinance, an official statement said.
“The owners of existing stocks of e-cigarettes on the date of commencement of the Ordinance will have to suo moto declare and deposit these stocks with the nearest police station,” it said.
Use of e-cigarettes is punishable with an imprisonment of up to one year or fine up to Rs 1 lakh or both for the first offence; and imprisonment of up to three years and fine up to Rs 5 lakh for a subsequent offence.
Even storage shall also be punishable with an imprisonment up to six months or fine up to Rs 50,000, or both.
E-cigarettes are being used as a “style statement”, the finance minister said, and the government wants to stop the contagion before it spreads.
Sitharaman was part of a group of ministers that examined the Prohibition of E-cigarettes Ordinance, 2019, following directions from the Prime Minister’s Office.
Electronic cigarettes are battery-operated devices that produce aerosol by heating a solution containing nicotine, which is the addictive substance in combustible cigarettes. These include all forms of Electronic Nicotine Delivery Systems, Heat Not Burn Products, e-Hookah and the like devices.
‘Popular among youth’
“These novel products come with attractive appearances and multiple flavours and their use has increased exponentially and has acquired epidemic proportions in developed countries, especially among youth and children,” the government said.
While India does not have any manufacturing unit for e-cigarettes, there are about 400 brands sold in the country in 150 different flavours.
According to ITC’s annual report, 12 Indian states had either prohibited or restricted the sales of e-cigarettes. As many as 27 countries, including Singapore, Australia, Thailand, Taiwan, the UAE, Brazil and Argentina also have prohibited e-cigarettes.
The ordinance will have to be approved by Parliament when it returns for the next session due in November.