FAIFA warns of auction paralysis after steep cigarette tax hike, seeks Centre’s intervention
New Delhi: The Federation of All India Farmer Associations (FAIFA) on Friday warned that sharp hikes in cigarette taxes have brought tobacco auctions to a halt at 10 centres in Karnataka, including Mysuru and Periyapatna, pushing growers into distress and triggering urgent appeals to the Centre ahead of the Union Budget.
FAIFA said recent tax increases—estimated at over 70 per cent for some cigarette categories—have disrupted the tobacco value chain, leading to near-total non-participation by traders at auction platforms. As a result, auctions in Karnataka have been repeatedly postponed, leaving farmers with large quantities of unsold produce and mounting financial stress. The disruption also threatens to spill over into Andhra Pradesh, where auctions are due to begin in early March.
Karnataka has authorised the auction of flue-cured Virginia (FCV) tobacco this season, but a substantial portion of the crop remains unsold. FAIFA Joint Secretary Vikramraj Urs said that against an authorised crop size of 100 million kg, estimated production is about 85 million kg, of which only 42 million kg had been auctioned as of January 22. Nearly half the crop, he said, is still with farmers amid continued auction delays.
FAIFA President P S Murali Babu warned that stalled auctions in Karnataka could delay the marketing season in Andhra Pradesh, directly affecting farmer incomes and disrupting the broader market.
Farmer groups described the situation as a “triple shock”—auction disruptions, weakening exports due to loss of global competitiveness after tax hikes, and punitive taxation that has reduced demand for legally manufactured cigarettes, encouraging illicit trade.
FAIFA said representations have been submitted to the Prime Minister, Union ministers and state governments seeking corrective action. It urged the Centre to rationalise taxes, restore buyer confidence and ensure immediate resumption of auctions to prevent further farmer distress. Mpost
