‘Unfair FCV tobacco taxes threaten farmer livelihoods and will fuel smuggling’

New Delhi: Federation of All India Farmer Associations (FAIFA), a non-profit organisation representing the cause of millions of farmers and farmworkers of commercial crops across the states of Andhra Pradesh, Telangana, Karnataka, Gujarat, etc has reacted sharply to the Ministry of Finance notification of the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026 that has imposed an excise

duty of Rs 2,050-8,500 per 1,000 sticks, depending on cigarette length, effective 1 February.

FAIFA has expressed concern that such a steep hike in taxes, as against the government statements around the revenue neutral transition from compensation cess regime to alternative regime, would make domestic manufacturers to raise prices of finished goods, which will lead to a drop in sales, hurting farmers supplies in return.

This could cause a glut in the tobacco crop market in the near term.

Already, India’s tobacco tax regime is openly discriminatory against FCV tobacco growers hailing from the states of Andhra Pradesh and Karnataka.

FCV tobacco farmers are already suffering under the burden of extremely high taxation rate on cigarettes (using FCV tobacco) which were on per kg basis more than 50 times higher than for

bidis and more than 30 times higher than for Chewing tobacco.

Further, while FCV tobacco attracts more than Rs 6 in tax per dose in the finished product, other tobacco forms used in bidis and chewing products are taxed at less than one paisa per dose.

Such extreme disparity punishes the most regulated and compliant farmers.

The current steep excise hike is further widening this fiscal discrimination and will crush FCV

growers and distort the entire tobacco economy.