Tobacco farmers meet FM, appeal for reduction in high taxation on tobacco products

Union Finance Minister Nirmala Sitharaman (right) meets FCV tobacco farmers in New Delhi on Thursday, 22 January 2026.

A delegation of FCV (flue cured virginia) tobacco farmers has met Union Finance Minister Nirmala Sitharaman and appealed to her to reduce the tax incidence on legal cigarettes.

They expressed serious concerns over the recent tax hike and its likely adverse impact on the regulated FCV tobacco ecosystem and farmers’ livelihoods.

“Nirmala Sitharaman listened carefully to all concerns and responded positively and assured that the Government will look into the issues, review the concerns, and consider the points raised by the farmers and stakeholders,” a member of the delegation said here in a statement on Thursday.

“She also assured that the Government’s approach will be revenue-neutral, while taking into account the impact on farmers, trade, and the regulated ecosystem. She further stated that the Government is not looking to generate additional revenue from the tobacco sector,” the statement said.

While explaining their concerns to the Minister, farmers said the tax hike may drastically reduce domestic consumption, leading to sharp price declines, an accumulation of unsold stock and reduced buying interest from traders. They also warned that sudden tax shocks have historically encouraged illegal and smuggled products, citing the example of South Africa, where legal factories reportedly shut down as illicit trade expanded to nearly 75 per cent of the market.

The delegation included farmer representatives from Andhra Pradesh, Telangana and Karnataka (the three states where FCV tobacco is grown), Tobacco Board Chairman Yashwanth Kumar Chidipothu and Daggubati Purandeswari, a Member of Parliament from Andhra Pradesh.

Farmers from Karnataka explained that auction prices have already declined by nearly 10 per cent, and they have received information that, from February 1 onwards, traders may not participate due to the 18 per cent tax on unmanufactured tobacco.

“They cautioned that if buyer participation reduces further, the auction system will be severely affected and farmers will face heavy losses,” a statement said.

Yashwanth Kumar cautioned that weaker buyer participation could directly affect auction competitiveness, leading to lower prices and higher unsold stock, ultimately impacting farmer livelihoods and the entire value chain.

Published on January 22, 2026