New Delhi: There is no available data on whether higher taxation on tobacco and tobacco products has adversely affected the incomes of tobacco farmers, as claimed by industry bodies that produce tobacco products such as cigarettes, the Parliament was informed on Tuesday.
The government introduced a new excise duty regime on tobacco products with effect from February 1, 2026, replacing the earlier compensation cess framework. Cigarettes now attract excise duty ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on their length, in addition to the existing GST.
“With regard to direct correlation between higher taxation on tobacco and tobacco products and its adverse impact on the income of tobacco farmers, no such assessment is available with the department,” the Commerce and Industry Ministry said in a written reply to a question in the Lok Sabha.
The government statement said that India is the world’s second-largest tobacco producer after China. The exports of tobacco and tobacco products increased from 240.93 million kg, valued at Rs 6,450.66 crore, to 368.85 million kg, valued at Rs 17,192.04 crore, over the past decade. This represents a 53.10 per cent increase in quantity and a 166.51 per cent increase in value.
The government further stated that it has taken measures to support Flue-Cured Virginia (FCV) tobacco growers, including promoting good agricultural practices, supplying quality seeds, fixing authorised crop size in consultation with stakeholders and strengthening the electronic auction platform for transparent price discovery and timely payments.
The average price realised by FCV tobacco growers has risen from Rs 134.43 per kg to Rs 251.14 per kg over the last 10 years, an increase of 86.82 per cent, the statement said.
The tobacco industry had also claimed that the higher taxes would encourage illicit trade in tobacco products.
However, the government listed measures introduced to curb illicit trade and tax evasion in the tobacco and pan masala sector, including a capacity-based central excise levy, retail sale price-based valuation under GST, withdrawal of the IGST refund route for zero-rated tobacco exports, mandatory monthly declarations of production capacity and output, and a track-and-trace mechanism for evasion-prone commodities.
(IANS)
