Godfrey Phillips India, a major Indian tobacco company and an FMCG player, has expressed concern over the sharp rise in illicit tobacco trade following the implementation of the revised indirect taxation structure on tobacco products in February 2026, saying the higher tax burden on the legal cigarette industry has produced unintended consequences.
In her letter to shareholders in the company’s Annual Report 2026, Chairperson Dr. Bina Modi said the revised tax regime had significantly increased the incidence of taxation on the legal cigarette industry while inadvertently encouraging the growth of illegal tobacco products.
“The unintended consequence requires sustained engagement among policymakers, enforcement agencies and industry participants to ensure a balanced and effective framework that supports legitimate businesses while protecting government revenues,” she said.
Domestic business records healthy growth
Despite the challenging regulatory environment, Godfrey Phillips India reported robust growth in domestic cigarette volumes during FY26, driven by market expansion and deeper penetration initiatives.
The company also expanded its direct retail outlet coverage, strengthening its presence across urban, semi-urban and rural markets. The wider distribution network helped increase consumer reach across the country and supported volume growth in its core cigarette business.
International business gains momentum
Godfrey Phillips’ international operations continued to emerge as a key growth driver during the year.
The company reported Gross Sales Value of ₹2,014 crore from its overseas business, accounting for 22% of net sales. Its international footprint now spans around 30 countries across Latin America, the Middle East, Southeast Asia and Eastern Europe.
The company said it has steadily expanded its global presence through a portfolio comprising both its own cigarette brands, private-label products and unmanufactured tobacco.
Exports of unmanufactured tobacco remained a significant contributor to international revenue, supported by the superior quality of Indian tobacco, the company’s crop development capabilities and long-standing relationships with global customers.
Strategic partnerships remain key
Godfrey Phillips highlighted that strategic partnerships continue to strengthen its business.
The company said its long-standing association with Philip Morris International for the Marlboro brand remains an important pillar of its product portfolio, complementing its own brands in the domestic market.
Focus on growth and operational efficiency
Looking ahead, the company said it will continue to focus on strengthening its core business while expanding its international presence, broadening its product portfolio and improving operational efficiencies.
Dr. Modi expressed confidence that Godfrey Phillips’ established brands, extensive distribution network, experienced leadership team and disciplined execution would help the company navigate a dynamic business environment.
She added that sustainability, corporate governance and long-term stakeholder value creation would remain central to the company’s strategy as it builds a stronger and more resilient organisation.