India Tobacco Excise Duty Hike

The India — Ministry of Finance (India) has notified a significant increase in excise duties on tobacco products, effective February 1, 2026, with rates ranging from ₹2,050 to ₹8,500 per 1,000 cigarette sticks. The Federation of All-India Farmer Associations (FAIFA), representing millions of farmers across India, has strongly urged the government to roll back these higher taxes. FAIFA, led by President Murali Babu, argues that the steep hike contradicts previous government assurances of revenue neutrality under GST 2.0 and will severely hurt farmer incomes, reduce demand for domestically grown tobacco, and exacerbate smuggling. They highlight that India's legal cigarette prices are already among the least affordable globally, according to the World Health Organization's index, and that the new taxes will push consumers towards illegal channels. FAIFA also points out a discriminatory tax regime against Flue-Cured Virginia (FCV) tobacco growers and the rising input costs for farmers, as noted by the World Bank Group, which further compounds their distress. The organization warns that this policy will destabilize the legal tobacco value chain, leading to job losses and significant revenue losses for India.