In order to discourage smuggling and promote indigenous agriculture, the Federation of All India Farmer Associations (FAIFA) called on the government to reverse the notified excise rates on tobacco products and change them to revenue-neutral rates. In a statement, FAIFA stated that maintaining farmer incomes, safeguarding jobs along the value chain, and coordinating economic policy with long-term public health objectives all depend on a stable tax system. With effect from February 1, the Ministry of Finance’s “Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026” announcement imposes an excise charge of between Rs 2,050 and Rs 8,500 per 1,000 sticks, depending on cigarette length.
According to FAIFA, such a drastic increase in taxes would compel domestic producers to raise the cost of completed items, which would result in a decline in sales and harm farmers’ supply. In the near future, this might lead to an oversupply in the market for tobacco crops, it continued. “The government promised that in the case of tobacco products, GST would be charged at 40 percent of the retail sales price while the overall incidence of tax would be kept unchanged when they announced GST 2.0 on September 4, 2025,” stated Murali Babu, President of FAIFA. He went on to say that the government’s move to rationalize GST by restructuring rates and eliminating the 12 percent slab, which helped lower costs, was welcomed by the farming community throughout India, which has been clinging to this guarantee of revenue neutrality.
FAIFA officials made an appeal to the government, emphasizing that the World Health Organization’s (WHO) affordability index shows that India’s legal cigarette prices are already among the most expensive in the world when compared to per capita income. It said that the current sharp rise will make legal products unaffordable for a large portion of consumers, hastening their migration to illicit channels. FAIFA urged the government to make sure that tax laws do not penalize people who have always complied with the law.
