Naidu urges cigarette tax relief, warns 43,000 tobacco farmers at risk under revised regime

The livelihoods of nearly 43,000 tobacco farmers and lakhs of workers dependent on the sector are at risk under India’s revised cigarette tax policy, Andhra Pradesh Chief Minister N. Chandrababu Naidu warned, The Hindu reported. ^[1]

Naidu said he wrote on May 18, 2026, to Union Finance Minister Nirmala Sitharaman and Union Commerce and Industry Minister Piyush Goyal seeking relief for FCV tobacco farmers. ^[1] In his representation, he argued that the cumulative impact of GST, excise duty and the National Calamity Contingent Duty has slowed market purchases and created uncertainty across the tobacco sector. ^[1]

He linked the pressure on growers to shifts in buying behavior, saying tobacco-buying companies reduced procurement volumes and that this caused losses to farmers. ^[1] He also pointed to a decline in prices at auction, stating that the opening auction price of tobacco fell from ₹280 per kg in the 2022 season to ₹250 per kg in the 2023 season. ^[1]

Naidu attributed the squeeze to the revised tax regime that he said took effect from February 1, 2026, raising GST on cigarettes from 28% to 40% and increasing excise duty from ₹2,050 to ₹8,500 per 1,000 cigarettes. ^[1] He said these changes adversely affect tobacco farmers. ^[1]

The letter comes as part of a sequence of fiscal-policy decisions and debate around the 2026 national budget, including a budget-session exchange in Parliament in which Finance Minister Sitharaman replied to the budget debate in the Rajya Sabha on February 12, 2026. ^[1]

Naidu also cautioned that excessive taxation on legal cigarettes could lead to an increase in illicit tobacco products in the market. ^[1]