India Tobacco Board urges Finance Minister Nirmala Sitharaman to revisit cigarette duty hike

Key Takeaways

• Tobacco Board wrote to Finance Minister Nirmala Sitharaman (Nirmala Sitharaman) urging a revisit of the cigarette duty hike
• Report says the excise hike effective February 1 led to up to a 60% real-term price increase
• Chairman Yashwanth Kumar Chidipothu (Yashwanth Kumar Chidipothu) requested intervention in a letter dated February 10
• Chairman said he was writing on behalf of FCV (Flue-Cured Virginia) tobacco farmers; media reports cited protests and representations to MPs
• Report cited links between high tax differentials and smuggling risks, and called for enforcement, track-and-trace, and international cooperation

2Firsts, February 10, 2026 – 

According to TOI, in New Delhi, the Tobacco Board, under the administrative control of the Department of Commerce, has written a letter to Finance Minister Nirmala Sitharaman (Nirmala Sitharaman) highlighting the adverse impact of the unprecedented increase in excise duties on cigarettes on the industry, as well as on millions of farmers and workers.

The report said the excise hike effective February 1 has resulted in a price increase of up to 60 per cent in real terms.

It added that steep tax increases heightened the risk of accelerated illicit cigarette trade, which has emerged globally as a serious economic and governance challenge. The report also said the unregulated market deprives governments of substantial tax revenues, undermines legitimate businesses, fuels organised criminal networks, and poses risks to public health and security.

“Considering the urgent industry situation and the significant impact on the farming community, I request you to intervene and revise the excessive duty rates on tobacco products,” Tobacco Board Chairman Yashwanth Kumar Chidipothu (Yashwanth Kumar Chidipothu) said in a letter dated February 10, according to the report.

The report said the chairman, who is also a senior BJP leader, stated that he was writing on behalf of FCV (Flue-Cured Virginia) tobacco farmers who had approached the Board to express serious concerns over the tax hike. He further reiterated that, as reported in the media, farmers have begun staging protests and submitting representations to their respective Members of Parliament.

“High tax and price differentials create strong incentives for smuggling, particularly when enforcement capacity is constrained. Weak border controls, fragmented oversight, and the absence of effective tracking and tracing mechanisms allow illicit operators to exploit policy gaps, while illicit cigarettes increasingly serve as a conduit for organised crime and money laundering,” he said, as quoted in the report.

The report said the consequences extend beyond revenue loss, citing global evidence that billions in excise and tax revenues are diverted annually to the illicit economy, reducing funds available for public services. It added that legitimate manufacturers face shrinking market shares, job losses, and plant closures, while consumers are exposed to products that bypass health regulations, lack age-verification safeguards, and are often linked to other illegal goods such as counterfeit cigarettes, illicit vapes and nicotine pouches.

The Tobacco Board Chairman stressed that addressing the illicit cigarette trade requires a balanced and coordinated policy approach, including strengthened enforcement, effective track-and-trace systems, coherent and enforceable regulations, and enhanced international cooperation.

The report also quoted the chairman as saying the unprecedented increase in excise duties has created serious distress across the tobacco value chain, affecting millions of farmers, workers and small shops dependent on the sector. It said he added that the tax hike is expected to severely depress farmer incomes as the legal cigarette industry—the primary domestic buyer of FCV tobacco—is likely to sharply curtail its offtake, leaving farmers unable to recover even the basic cost of cultivation, currently estimated at around Rs 200 per kilogram (USD equivalent not provided in the source; exchange-rate basis not stated).

Image Source: TOI

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