FAIFA seeks rollback of tax hike on tobacco products

The members of Federation of All India Farmer Associations (FAIFA) took out a rally to protest against the proposed tax hike on tobacco products, in Ongole on Saturday. They also met Ongole MP Magunta Srinivasulu Reddy to submit a representation demanding the Central government to roll back the recently announced increase in taxes on tobacco goods.

The FAIFA is a non-profit organisation representing the cause of farmers and farmworkers of commercial crops across various States including Andhra Pradesh, Telangana, Karnataka and Gujarat. It opposed the Ministry of Finance notification that imposed an excise duty of ₹2,050-8,500 per 1,000 sticks, depending on cigarette length, effective from 1 February, 2026.

The FAIFA members expressed concern that such a steep hike in taxes would make domestic manufacturers to raise prices of finished goods, which will lead to a drop in sales, hurting farmers’ supplies in return, and causing a glut in the tobacco crop market in the near term.

Speaking to The Hindu, FAIFA president Murali Babu said, “Flue-Cured Virginia (FCV) tobacco growers from A.P. and Karnataka are already suffering due to the high taxation rate on cigarettes (using FCV tobacco), which on a kilogram basis is over 50 times higher than bidis and over 30 times higher than chewing tobacco.”

“While FCV tobacco attracts more than ₹6 in tax per dose in the finished product, other tobacco forms used in bidis and chewing products are taxed at less than one paisa per dose. Such extreme disparity punishes the most regulated and compliant farmers. The current steep excise hike will further crush the FCV growers and distort the entire tobacco economy,” he said.

“While announcing GST 2.0 on 4 September 2025, the government had assured that in the case of tobacco products, GST would be charged at 40% of the retail sales price, while the overall incidence of tax would be kept unchanged. Instead a sharp increase in taxes has been notified, at the cost of farmers’ livelihoods,” Mr. Murali said.

The FAIFA has urged the government to roll-back the notified excise rates and revise them to revenue-neutral rates, to disincentivise smuggling, and support domestic agriculture. A stable taxation framework is necessary to sustain farmer incomes, protect employment across the value chain, and align economic policy with long-term public health goals, he added.