Tobacco Board Seeks Review of Cigarette Excise Hike After Near-60% Price Surge

Overview

• In a February 10 letter to Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal, the Tobacco Board formally requested the government revisit the December 31, 2025 excise hike.
• The Board estimates the change, effective February 1, has lifted cigarette prices by nearly 60% in real terms, straining the legal market and supply chain.
• FCV tobacco growers report protests and appeals to MPs as the Board warns farmgate prices could fall below the roughly Rs 200 per kg cost of cultivation, with potential declines of Rs 60–70 per kg cited.
• The Board cautions that a widening price gap could expand illicit trade, noting India’s illegal cigarette share is estimated at about 26% and retail packs could reach roughly Rs 400 versus Rs 75–80 in nearby markets.
• Recommendations include a calibrated tax approach, stronger enforcement and track-and-trace systems, with international cases in South Africa and Australia cited to underscore smuggling risks and enforcement needs.