New Delhi, February 11, 2026
The Tobacco Board has urged the Ministry of Finance to reconsider the recent excise duty increase on cigarettes, warning of its potential adverse impact on the industry, farmers, and workers.
In a letter addressed to Finance Minister Nirmala Sitharaman, the Board highlighted concerns that the higher tax burden could disrupt livelihoods and fuel illegal trade.
📩 Letter to the Finance Minister
In the February 10 letter, Tobacco Board Chairman Yashwant Kumar Chidipothu said the industry is facing a challenging environment and that the elevated tax rates could have a significant impact on the farming community.
He requested that the government review and rationalize the higher tax structure on tobacco products.
🌾 Concerns Over Farmer and Worker Livelihoods
The Board stated that millions of farmers and workers depend on the tobacco value chain. A sharp increase in taxation, it argued, could affect production, procurement, and overall market stability.
Industry representatives have also expressed concerns that higher retail prices may reduce legal sales volumes.
⚠️ Risk of Illicit Trade
Another key concern raised in the letter is the potential rise in illegal cigarette trade. The Board warned that substantial tax hikes may create incentives for smuggling and counterfeit products, posing economic and administrative challenges.
Illicit trade could result in revenue losses for the government and undermine regulatory oversight, the Board noted.
📊 Policy Review Sought
The Tobacco Board has called for a reassessment of the excise structure in light of its impact on stakeholders across the supply chain. The Finance Ministry has not yet publicly responded to the request.
The development comes amid broader fiscal policy adjustments and ongoing discussions around indirect taxation.
