India's government will implement a new excise duty and health cess on tobacco products and pan masala from February 1, replacing the GST compensation cess. This move is expected to increase cigarette prices, with longer cigarettes facing higher taxes. Tobacco stocks, including ITC and Godfrey Phillips, have seen significant declines following the announcement. The Federation of All India Farmer Associations (FAIFA) and the Tobacco Institute of India (TII) have raised concerns, warning of harm to farmers, increased smuggling, and a boost to the illicit trade, while some brokerages have downgraded ITC due to earnings outlook concerns.