Shares of cigarette makers rose on Thursday, buoyed by reports that the Health Ministry's proposal to ban the sale of loose cigarettes has been put on hold.
While ITC rallied 6% intraday, shares of other cigarette companies also made gains. While Godfrey Phillips rose 10% VST Industries gained 6%.
The proposed ban was mooted by the Union Health Ministry to curb smoking.
Some MPs and farmers' associations had termed the move a drastic regulatory measure.
India is the world's second largest producer of tobacco, earning the nation about ₹6,000 crore ($1bn) in foreign exchange.
Cigarette sales contribute in a big way in excise revenues to the Centre.
Union Urban Development Minister M Venkaiah Naidu on Wednesday called a meeting with Union Health Minister J P Nadda to convey concerns voiced by MPs.
Ministers from major tobacco growing states of Karnataka and Andra Pradesh, Ananth Kumar and Nirmala Sitharaman and Mohanbhai Kundaria, were present at the meeting.
Union Agriculture Minister Radhakrishnan Singh said tobacco and arecanut are important cash crops directly impacting farmers who grow them.
An inter-ministerial consensus is unlikely to evolve soon, said government sources.
Naidu added that if implemented, the ban would lead to people shifting from cigarettes to other tobacco products including bidis and chewing tobacco, leaving little impact on overall tobacco consumption.
He convened the meeting after receiving representations from tobacco-growing farmers associations in the two states on the likely adverse impact on their livelihood due to the proposed amendment to the Cigarettes and other Tobacco Products Act.
Statistics show that about 10% of India's population of 1.2bn are smoke cigarettes and another 155mn are classified as smoking bidis and chewing tobacco.
Tobacco consumption accounts for nearly half of all cancers among men and a quarter among women, apart from being a major cause of heart and lung diseases, say experts.
