Tobacco Board flags 60% cigarette price surge, seeks relief from Sitharaman, Goyal

New Delhi: Tobacco Board Chairman Yashwanth Kumar Chidipothu has written to Finance Minister Nirmala Sitharaman and Commerce and Industry Minister Piyush Goyal, seeking an urgent review of the sharp excise duty hike on cigarettes notified on December 31, 2025, which has led to an effective 60 per cent rise in prices in real terms.

He said the unprecedented increase has caused severe distress across the tobacco value chain, affecting millions of farmers, workers and small retailers. Writing on behalf of flue-cured Virginia (FCV) tobacco farmers, Chidipothu said many growers have approached the Board expressing deep concern, with protests and representations already underway in several regions.

The Chairman warned that steep and uncalibrated tax hikes risk accelerating the growth of illicit cigarette trade, depriving the exchequer of revenue, hurting legitimate businesses and strengthening organised crime networks. High price differentials, weak enforcement and the absence of effective track-and-trace systems, he said, create strong incentives for smuggling.

Chidipothu cautioned that farmer incomes could collapse as the legal cigarette industry, the main domestic buyer of FCV tobacco, may sharply reduce offtake. With cultivation costs estimated at around ₹200 per kg, farmers may struggle to recover even basic expenses. Drawing parallels with past tax hikes, he said prices could fall by Rs 60–70 per kg amid high input costs and global oversupply.

He stressed the need for a balanced, enforceable tax and regulatory framework to protect livelihoods, curb illicit trade and safeguard revenue and public health.