India's largest tobacco manufacturer, ITC limited Chairman, Y.C. Deveshwar said on Thursday that U.S- based funding is promoting tobacco smuggling in India. In Pic: Y.C. Deveshwar, chairman of India's top tobacco firm ITC Ltd., speaks during a news conference in the eastern Indian city of Kolkata July 27, 2007.Reuters

The standoff between the government and the tobacco products' companies refuses to die down with India's largest cigarette manufacturing company ITC Limited saying it would not print larger health warnings on its cigarette packs.

ITC ltd. informed the Bombay Stock Exchange (BSE) in a filing Saturday that it cannot waste its substantial resources in reprinting the large size health warnings, especially when the matter is pending before the courts.

It further said the implementation of any change in the health warnings is an elaborate process for the manufactures, entailing months of preparation that involve substantial money and effort.

The union health ministry's directive on increasing the size of health warnings on tobacco and cigarette packs to 85 percent from 40 percent came into force April 1. The new rules regarding health warnings have sparked a debate in the country, with a government-appointed panel supporting the tobacco industry, while calling the new measures "extreme."

ITC said that the issue of printing larger health warnings on the packets of the products, as directed by the government, is pending before the Karnataka High Court, which was approached by the Tobacco Institute of India (TII) challenging the government order. The company added that in a petition filed before the Rajasthan High Court, the union health ministry said the recommendations of the parliamentary panel are being considered by the government.

ITC hit out at the government for making the tobacco industry believe that the recommendations of the panel were being considered.

"The industry was led to believe that the government would re-notify new health warnings after considering the committee's recommendations," the filing said.

The company said many representations were made before the government by the tobacco, cigarette farmers and manufacturers pointing out the illegality and potential adverse impact of these new health warnings.

ITC further said the health ministry later appointed a parliamentary panel to look into the matter .

The parliamentary committee's interim report suggested the government to defer the implementation of new rules, till the committee finalises its report. However, the ministry went ahead with its decision without considering the report, the statement said.

The cigarette and tobacco companies, including ITC, Godfrey Phillips and VST industries, April 2, announced to shut down their factories against what they called ambiguity over the government's directive.

The shutdown is likely to cost the cigarette manufacturing companies Rs. 350 crore per day.