Cigarette makers heaved a sigh of relief on Monday as union finance minister kept excise duty on cigarettes unchanged in the Union Budget 2011-2012. ITC spurted 8.23 % to Rs 169 and topped the gainers in the BSE's 'A' group during the day.

The Tobacco Institute of India director Udayan Lall welcomed the stability in excise duty rates provided in the Union Budget. "This will help in protecting earnings of the cigarette leaf tobacco farmers who have been going through extremely trying times on account of low production and depressed international prices. High taxes on cigarettes had also led to a growing market for contraband."

Additionally, increased investment in infrastructure and a supportive agri-cultural policy are steps in the right direction, Mr Lall added.

"s," ITC spokesperson claims, "have been an extremely over-taxed segment, both at the centre and states, leading to an erosion of the tax base and an increase in smuggling and proliferation of illegal products. In a year of significant crop losses, further increase in taxes would have crippled the farmer and severely impacted livelihoods."