India: The Upside Of A Ban

India¡¯s ban on vaping products comes with an upside for the country¡¯s dominant cigarette manufacturer, ITC, according to a story by Kiran Kabtta Somvanshi for the Times of India quoting the ET Intelligence Group.

The story said that the blanket ban on the import, manufacture and sale of electronic cigarettes and other electronic nicotine delivery systems had nipped ITC¡¯s plans of entering this sector in the bud.

But, the story added, the ban might be seen as saving the company from the threat of disruptive competition.

In India, the use of e-cigarettes was still in its infancy.

ITC had launched e-cigarettes in 2014 under the brand name Eon. But the company had not committed to making a major investment in the product, probably as it waited for clarity in respect of the introduction of regulations and the reaction of consumers.

Now, the Times said, the ban prevented the entry of products such as Philip Morris¡¯ iQOS device into the Indian market, which had the second-largest number of smokers.

¡®Little wonder then that ITC¡¯s stock closed positive despite yet another regulatory measure being introduced to discourage smoking,¡¯ the Times said.

¡®It nevertheless remains to be seen how the country¡¯s top tobacco company looks at innovating its conventional cigarettes business besides the strategy of premiumizing its portfolio,¡¯ it said.

ITC was said to have entered the nicotine-replacement product market in 2013 with the launch of the chewing gum Kwiknic. But the company¡¯s latest annual report had no mention of this product; so investors would want to know the company¡¯s Plan B for innovation in its bread-and-butter business.  Enditem

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