FAIFA protests rise in prices of finished products
Has expressed concern that such a steep hike in taxes would make domestic manufacturers raise prices of finished goods
Tobacco farmers protesting against increase in finished products saying this will be counter-productive for them
Vijayawada: Federation of All India Farmer Associations (FAIFA), a non-profit organisation representing the cause of millions of farmers and farmworkers of commercial crops across Andhra Pradesh, Telangana and few other States, 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 Rs2,050-8,500 per 1,000 sticks, depending on cigarette length, effective February 1.
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 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 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 Rs6 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.FAIFA president Murali Babu said: “While announcing GST 2.0 on 4 September 2025, the government had assured that in the case of tobacco products, GST would be charged at 40 per cent of the retail sales price, while the overall incidence of tax would be kept unchanged.
The farming community across India has been holding on to this assurance of revenue neutrality and had welcomed the government’s decision to rationalise GST by restructuring rates and doing away with the 12 per cent slab, which helped reduce prices.
