LIC's ₹11,400 Crore Hit

Due to a dramatic drop in its holdings in ITC shares, LIC suffered a major blow, losing nearly ₹11,400 crore in value over the course of two days. The loss is a result of recent government increases in the GST and excise tax on cigarettes, which had a significant effect on the price of ITC's shares. This incident demonstrates how susceptible LIC's portfolio is to changes in industry-specific regulations.

Cause of Loss

With effect from February 1, 2026, the Indian Finance Ministry approved a 40% increase in GST and a higher excise levy on cigarettes, ranging from ₹2,050 to ₹8,500 per 1,000 sticks depending on length. The shares of ITC, a major FMCG operator with a sizable tobacco business, fell 10% in one day—the largest single-day decline in six years—and then another 5% the next day, reaching a 52-week low of ₹345.25 on the NSE.

LIC's Exposure

LIC is one of the biggest owners in ITC, owning 198.58 crore shares, or 15.86% of the company. As part of a larger ₹72,300 crore erosion for all ITC shareholders in recent months, the two-day ITC collapse resulted in a mark-to-market loss of nearly ₹11,460 crore for LIC.

Market Impact

According to experts, ITC may increase cigarette prices by as much as 40% in order to offset taxes, which might reduce demand and volumes. FMCG companies were under pressure as a result, although overall markets held up well despite encouraging developments in other industries.