Focus positively on reducing GST on tobacco exports from 40% to 28%: Yashwanth Kumar

The Center has responded positively to four key proposals made for the benefit of tobacco growers and exporters, says Yashwanth Kumar Chidipothu, chairman of the tobacco company. | Photo credit: File Photo

The Union government has responded positively to Andhra Pradesh’s request to reduce the Goods and Services Tax (GST) on unmanufactured tobacco for export from 40% to 28%, offering relief to exporters and raising hopes among tobacco farmers amid the FCV tobacco crisis in the state.

On the instructions of Chief Minister N. Chandrababu Naidu, Agriculture Minister K. Atchannaidu along with other state ministers and Members of Parliament met Union Finance Minister Nirmala Sitharaman and Union Commerce and Industry Minister Piyush Goyal in New Delhi on Monday and Tuesday to press for measures to strengthen the tobacco sector.

Tobacco Board Chairman Yashwanth Kumar Chidipothu, who was part of the delegation, told The Hindu on Wednesday that the Center had responded positively to four key proposals made for the benefit of tobacco growers and exporters across the country.

He said the state government had urged the Center to reduce the GST on unmanufactured tobacco used for export from 40% to 28%, arguing that the higher tax burden blocks exporters’ working capital and weakens India’s competitiveness in global markets. It is actually a tax that would be refunded after the goods are exported, but it holds the money until it is refunded.

The delegation also sought market intervention to protect farmers by providing at least ₹20 per kg as subsidy on tobacco. Although the Union Government did not agree to provide direct assistance at the proposed rate, it assured the delegation that alternative incentive mechanisms would be explored to protect farmers’ interests.

Another key demand was to extend benefits under the Export Duty and Tax Exemption Program (RoDTEP) to tobacco falling under the HSN 2401 series, a move that should improve export prospects.

export support

During the discussions, the Union Commerce Minister advised the Tobacco Board to participate in international roadshows, trade shows and exhibitions to expand the global presence of Indian tobacco. He urged the Board to utilize Niryat Protsahan, a sub-programme under the Export Promotion Center’s mission to strengthen export promotion efforts.

Published – 23 July 2026 11:00 AM IST