Rising Cigarette Prices Fuel Counterfeit Boom in Bihar's Munger

Munger, a nondescript town in Bihar that once etched its name in industrial history as the first place in Asia to roll out cigarette sticks, is now grappling with a very different distinction: emerging as a hub for counterfeit cigarettes amid steadily rising prices.

The town has long been associated with India's cigarette industry. A factory set up here in 1907 by the erstwhile Imperial Tobacco Company of India Ltd, now ITC Ltd, a diversified conglomerate and a Nifty 50 constituent, was the company's first manufacturing unit and remains its oldest. Interestingly, the Munger factory of ITC shares its birth year with Tata Steel.

However, with cigarette prices rising sharply over the past decade, the economics of arbitrage has increasingly favoured illegal operations. As a result, Munger has witnessed a surge in the manufacture and distribution of counterfeit cigarettes.

Not just ITC, but multiple agencies, including the Bihar Police, and the Directorate of Revenue Intelligence (DRI), are stepping up efforts to crack down on a well-organised network that spans the collection of empty cigarette packets, manufacturing of fake sticks, and their distribution across Bihar and neighbouring states such as Jharkhand, West Bengal, Odisha and Chhattisgarh.

The scale of the problem became evident last month when police seized nearly four lakh counterfeit cigarette sticks worth around ₹50 lakh, along with ₹85 lakh in cash, from a locality near the factory area. The haul underscored the growing threat posed by the trade, which not only deprives the exchequer of tax revenue but also raises serious public health concerns.

"It is a serious issue afflicting this area, and we are making concerted efforts to curb it," Munger Superintendent of Police Syed Imran Masood told PTI.

"We have conducted several search and seizure operations in the past to rein in the counterfeit cigarette trade. Following the recent big seizure, it appears that many syndicates have either gone underground or fled the district, as no similar incidents have been reported since the ₹50 lakh haul," he said.

Masood, however, cautioned that the administration remains on high alert, particularly with an increase in excise duty on cigarettes set to take effect from next month.

"There is a risk of such activities picking up again, but they will be dealt with an iron hand," he added.

The Centre has announced that from February 1, excise duty on cigarettes will range between ₹2,050 and ₹8,500 per 1,000 sticks, depending on their length. This will be over and above the maximum Goods and Services Tax (GST) rate of 40%.

According to estimates, agencies including the DRI and Bihar Police have seized counterfeit cigarettes worth ₹3.7 crore in 2025, compared with ₹7.5 crore in the previous year.

Explaining the modus operandi, Ramesh Chaurasia, a small cigarette vendor, said agents working for syndicates collect empty packets of popular brands from retailers at prices ranging from ₹1 to ₹1.5 per packet.

"These packets are reused to pack counterfeit cigarettes, which are then pushed into the market. The people involved keep changing frequently to maintain anonymity," Chaurasia said.

With cigarette prices already having risen sharply, many consumers are turning to cheaper alternatives. "That's where counterfeit or smuggled cigarettes come to their rescue, because they cost much less than the original ones," he added.

Besides this, Munger is also known for its craftsmanship in country-made firearms, and the rise of illegal arms manufacturing is another key reason behind the decline of licensed gun factories in the district.

Established in 1762 during the colonial period, these factories are among India's oldest surviving arms manufacturing units. Over time, they evolved into a specialised hub for the production of breech-loading firearms, with the craft passed down through generations and deeply embedded in Munger town's economy.

At present, there are 37 privately owned gun factories spread across nearly eight acres of land owned by the Bihar Industrial Area Development Authority (BIADA).