FAIFA Calls for Revision of Tobacco Excise Rates to Support Farmers

The Federation of All India Farmer Associations (FAIFA) has called on the government to reconsider the newly imposed excise rates on tobacco products. They argue that the steep increase could harm domestic manufacturers and farmers by making legal products unaffordable, pushing consumers towards illegal channels. FAIFA emphasizes the need for a stable taxation framework to support farmer incomes and align with public health goals. The organization highlights the importance of maintaining revenue neutrality in taxation policies to protect those who comply with the law. This appeal comes in light of recent government assurances regarding GST on tobacco products.

By Narendra Chaudhary Jan 2, 2026, 16:38 IST

FAIFA Urges Government to Adjust Tobacco Taxation

New Delhi, Jan 2: The Federation of All India Farmer Associations (FAIFA) has made a formal request to the government to reconsider the recently announced excise rates on tobacco products. They are advocating for a revision to revenue-neutral rates to discourage smuggling and bolster domestic agriculture.

FAIFA emphasized in their statement that a consistent taxation framework is crucial for maintaining farmer incomes, safeguarding jobs throughout the value chain, and aligning economic policies with long-term public health objectives.

The Ministry of Finance's notification titled ‘Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026’ has introduced an excise duty ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, based on the length of cigarettes, effective from February 1.

According to FAIFA, such a significant tax increase would compel domestic producers to hike the prices of their products, which could lead to a decline in sales and negatively impact farmers' supply chains. This situation may result in an oversupply in the tobacco market shortly.

Murali Babu, President of FAIFA, pointed out that during the announcement of GST 2.0 on September 4, 2025, the government had promised that tobacco products would be taxed at 40 percent of the retail sales price, while keeping the overall tax burden unchanged.

He noted that the farming community across India has relied on this promise of revenue neutrality and welcomed the government's decision to rationalize GST by restructuring rates and eliminating the 12 percent slab, which contributed to lower prices.

FAIFA leaders urged the government to recognize that legal cigarette prices in India are already among the least affordable globally when assessed against per capita income, as indicated by the World Health Organization’s (WHO) affordability index.

The current sharp increase in taxes will make legal products unaffordable for a significant portion of consumers, potentially driving them towards illegal alternatives. FAIFA has called on the government to ensure that taxation policies do not penalize those who have consistently adhered to the law.