India Bans E-Cigarettes As Global Backlash At Vaping Gathers Pace

NEW DELHI (Reuters) – India banned the sale of electronic
cigarettes on Wednesday and warned of an “epidemic” among young
people, in the latest and potentially biggest move globally against
vaping over growing health concerns.

The ban cuts off a huge future market from e-cigarette makers at
a time when the number of people smoking worldwide is declining. It
could dash the expansion plans of companies such as Juul Labs and
Philip Morris International (PM.N) in the country.

“These novel products come with attractive appearances and
multiple flavours and their use has increased exponentially and
acquired epidemic proportions in developed countries, especially
among youth and children,” India’s health ministry said.

The ban also covers the production, import and advertising of
e-cigarettes – but not the use of them. It comes at a time when
vaping is facing increased scrutiny in other countries.

The United States last week announced plans to remove flavoured
e-cigarettes from stores, warning that sweet flavours had drawn
millions of children into nicotine addiction.

The Indian prohibition will be imposed through an executive
order and will include jail terms of up to three years for
offenders.

India has 106 million adult smokers, second only to China in the
world, making it a lucrative market for companies making vaping
products such as U.S.-based Juul and Philip Morris, which
manufactures a heat-not-burn tobacco device.

The ban was announced by Finance Minister Nirmala Sitharaman at
a news conference, where she showed various types of products to
the media, including a Juul vaping device, which resembles a USB
flash drive.

Juul had plans to launch its e-cigarette in India and has hired
several senior executives in recent months. Philip Morris also has
plans to launch its heat-not-burn smoking device in India, Reuters
has reported.

A spokeswoman for Juul in India declined to comment. Philip
Morris did not respond to a request for comment.

Juul, in which tobacco giant Altria group (MO.N) owns a 35%
stake, is already facing government scrutiny in its home market and
elsewhere. In China, Juul said on Tuesday its products were not
currently available on e-commerce websites, days after it entered
the market.

HEALTH DISPUTE
India’s vapour-products market was valued at $57 million in 2018,
according to data from Euromonitor International. Before the ban,
the research group estimated the market in India would grow by
nearly 60 percent a year up to 2022.

Shane MacGuill, head of tobacco research at Euromonitor in
London, said the India ban could push other countries to follow
suit, hurting the global vapour industry.

“India is obviously a market of huge potential for vapour
products,” he told Reuters. “This ban would decisively cut off
access to that potential growth cohort for companies like Juul Labs
and PMI (Philip Morris International).”

The global market for e-cigarettes is still small compared to
cigarettes, but is growing rapidly. Last year global cigarette
sales totalled more than $713 billion, compared to $15.7 billion
for vapour products, according to Euromonitor. By 2023, the vapour
category is projected to more than double to $40 billion, while
cigarettes are expected to decline slightly.

Advocates for e-cigarettes say vaping, which usually involves
inhaling a vapour formed from heating up a liquid containing
nicotine, is far less harmful than smoking tobacco.

But many tobacco-control activists are opposed to the devices,
saying they could lead to nicotine addiction and push people
towards consuming tobacco.

More than 900,000 people die each year due to tobacco-related
illnesses in India, home to about 1.3 billion people.

The Association of Vapers India, an organisation that represents
e-cigarette users across the country, attacked the government’s
decision, saying it would deprive millions of smokers of a safer
solution to cut back on smoking.

COURT CHALLENGE?
The ban order will impose a jail term of up to one year and a fine
of 100,000 rupees ($1,404) for first-time offenders. A repeat
violation would attract a jail term of up to three years and a
penalty of up to 500,000 rupees, the government said.

The ban would cover the manufacture, import, sale, advertisement
and distribution of e-cigarettes. But it would not apply to the end
users of such devices, Vikas Sheel, a senior official at India’s
health ministry, told Reuters.

“Over a period of time, people will not get their (vape)
refills, so they will become responsible,” he said.

The government expects the ban order to be challenged in court,
but was prepared to defend its decision, Sheel added.

Shares in ITC (ITC.NS), India’s top cigarette maker, ended up
nearly 1%, while its rival Godfrey Phillips (GDFR.NS) surged 5.2%.
E-cigarettes form just a tiny part of their product range.

The ban order needs to be approved by the president before it
takes effect, but this is typically a formality.

Such executive orders are typically issued as an emergency
measure when Indian parliament is not in session. The ban order
could lapse if it is not approved when lawmakers convene against in
the next session of parliament, which will most likely be held in
November.

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