No data to show higher taxes on tobacco products has hit growers: Govt
New Delhi, July 28
There is no available data on whether higher taxation on tobacco and tobacco products has adversely affected the incomes of tobacco farmers, as claimed by industry bodies that produce tobacco products such as cigarettes, the Parliament was informed on Tuesday.
The government introduced a new excise duty regime on tobacco products with effect from February 1, 2026, replacing the earlier compensation cess framework. Cigarettes now attract excise duty ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on their length, in addition to the existing GST.
"With regard to direct correlation between higher taxation on tobacco and tobacco products and its adverse impact on the income of tobacco farmers, no such assessment is available with the department," the Commerce and Industry Ministry said in a written reply to a question in the Lok Sabha.
The government statement said that India is the world's second-largest tobacco producer after China. The exports of tobacco and tobacco products increased from 240.93 million kg, valued at Rs 6,450.66 crore, to 368.85 million kg, valued at Rs 17,192.04 crore, over the past decade. This represents a 53.10 per cent increase in quantity and a 166.51 per cent increase in value.
The government further stated that it has taken measures to support Flue-Cured Virginia (FCV) tobacco growers, including promoting good agricultural practices, supplying quality seeds, fixing authorised crop size in consultation with stakeholders and strengthening the electronic auction platform for transparent price discovery and timely payments.
The average price realised by FCV tobacco growers has risen from Rs 134.43 per kg to Rs 251.14 per kg over the last 10 years, an increase of 86.82 per cent, the statement said.
The tobacco industry had also claimed that the higher taxes would encourage illicit trade in tobacco products.
However, the government listed measures introduced to curb illicit trade and tax evasion in the tobacco and pan masala sector, including a capacity-based central excise levy, retail sale price-based valuation under GST, withdrawal of the IGST refund route for zero-rated tobacco exports, mandatory monthly declarations of production capacity and output, and a track-and-trace mechanism for evasion-prone commodities.
— IANS
Reader Comments
Simple logic: agar cigarettes expensive ho jayenge toh people will switch to illegal beedi or smuggled stuff. That hits farmers indirectly. Government should support alternative crops for tobacco growers. Andhra and Gujarat ke kisaan deserve better options. 🌱
Kya baat hai! Exports mein 166% value increase incredible hai. India is second-largest producer after China. Aur average price Rs 134 to Rs 251 per kg - that's almost 87% growth in 10 years. Bro, farmers are not crying, they are celebrating! Well done government for e-auction platform. Transparency matters. 💪
Tobacco is a serious health hazard - it kills lakhs every year in India. Higher taxes are necessary to discourage consumption. But farmers should not suffer. Government needs to provide compensation and alternative livelihood training. Tobacco board should invest more in crop diversification. Simple na? 🤔
Industry claims are always biased. Higher taxes ka effect farmers par directly measured nahi ho sakta because multiple factors play role. But what about illegal trade? Track-and-trace mechanism achi initiative hai. Hopefully ye black market ko control karega. Delhi mein to khule aam smuggled cigarettes milte hain. 😤
Main point: data nahi hai lekin government still says "no adverse impact directly correlated." That's a polite way of saying we don't know. Tobacco is a cash crop for many poor farmers in AP, Gujarat, Karnataka. Higher tax + rising costs = margin squeeze. Need more nuanced
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