Escalating Cigarette Excise Duties Spark Industry Unrest

The Tobacco Board is calling on Finance Minister Nirmala Sitharaman to reassess a major excise duty increase on cigarettes, effective February 1, which has dramatically raised prices and impacted farmers and industry workers. Chairman Yashwanth Kumar Chidipothu, also a senior BJP leader, highlighted the urgent need for intervention in a letter dated February 10.

The 60 percent price hike raises concerns about accelerating illicit cigarette trade, which poses significant economic and governance challenges. The unregulated market diminishes tax revenues and supports organized crime, risking public health and security. Farmers, affected by the tax rise, have started protests and approached MPs, demanding reduced duties.

The chairman emphasized that to curb illicit trade, there must be a balanced policy approach with enhanced enforcement and international collaboration. He warned that the legal cigarette industry, a major domestic buyer for FCV tobacco, may reduce purchases, risking farmer incomes and potentially driving them into debt as market prices fall.