A delegation of smoke-cured Virginia tobacco farmers led by Rajamahendravaram MP Daggubati Purandeswari with Union Finance Minister Nirmala Sitharaman in New Delhi on Thursday.
Union Finance Minister Nirmala Sitharaman has assured to review the recent hike in tobacco tax, according to Rajamahendravaram MP Daggubati Purandeswari.
A delegation of Flue-Cued Virginia (FCV) tobacco growers from Andhra Pradesh, Telangana and Karnataka, led by Ms. Purandeswari, met Ms. Sitharaman in New Delhi on Thursday to review the tobacco tax hike, citing its adverse impact on farmers and the regulated FCV tobacco ecosystem.
The delegation, which also included Tobacco Board chairman Yashwanth Kumar Chidipothu, expressed concern that the sudden hike in taxes could seriously affect the livelihood of thousands of farm families and disrupt the regulated auction-based marketing system.
Ms. Purandeswari later told The Hindu that the newly introduced 18% tax on unmanufactured tobacco would be a direct burden on farmers. It found that international production of FCV tobacco has increased and therefore there would be normal demand for Indian production in world markets. This would also have an impact on the local market, she added.
Stating that the new tax could lead to a decline in legal trade, a loss of revenue for the government and an increase in illegal trade, the delegation stressed the need to protect the domestic industry and the use of low-quality tobacco to maintain farmers’ incomes.
They said that illegal cigarettes were entering the country, which would effectively damage the domestic market.
Mr. Yashwanth Kumar explained that the announced rates, effective from February 1, would increase the tax burden on legal cigarettes by 73%, potentially weakening buyer participation, auction competitiveness and confidence in the trade.
Farmers from Andhra Pradesh and Telangana said the auctions are set to start next month, fearing a sharp fall in prices and unsold stocks.
Karnataka farmers reported a 10% drop in the auction price and warned that an 18% tax on unmanufactured tobacco could further discourage traders.
Responding to concerns, the Finance Minister assured the delegation that the government would review these issues and consider their impact, reiterating that the tax measures were intended to remain revenue neutral and not generate additional revenue from the tobacco sector.
Ms. Purandeswari said the tax decision was taken by a group of ministers and hence the finance minister assured to bring the matter to the attention of the cabinet.
Published – 22 Jan 2026 21:34 IST
