AP Chief Minister Assures Tobacco Farmers on Excise Duty Hike Issue
In a significant development, Andhra Pradesh Chief Minister N Chandrababu Naidu met with approximately 400 Flue-Cured Virginia (FCV) tobacco farmers on Tuesday, addressing their urgent concerns regarding the recent substantial increase in excise duty on cigarettes. The meeting, held in Vijayawada, saw farmers from key districts including Prakasam, Nellore, East Godavari, and West Godavari highlighting the severe repercussions of the over 70% hike implemented by the Union government.
Farmers Detail Impact of Tax Increase on Tobacco Value Chain
The delegation of farmers presented a detailed account of how the sharp tax increase has already begun to disrupt the tobacco value chain, even before the current marketing season has fully commenced. They reported that cigarette manufacturers have significantly reduced their offtake in response to the higher duties, creating immediate uncertainty in FCV tobacco auctions. This reduction in demand has led to depressed prices at auctions, triggering growing distress among the farming community who rely on these sales for their livelihoods.
Farmers emphasized that the disproportionate nature of the excise hike has created unintended consequences across the legal tobacco ecosystem. Representatives warned that the tax increase has inadvertently fueled a surge in illicit cigarette trade and smuggling activities, with untaxed and unregulated products flooding markets at alarming rates. This troubling trend, they explained, simultaneously harms compliant farmers who follow legal channels, legitimate manufacturers operating within regulatory frameworks, and government revenues that depend on proper taxation.
Critical Role of Legal Cigarette Market for FCV Tobacco
The farmers' delegation stressed a crucial economic reality: cigarettes remain the primary legal outlet for FCV tobacco production. Any contraction in the legal cigarette market directly affects multiple aspects of the tobacco economy including auction operations, buyer participation levels, and rural employment opportunities across the supply chain. Excessive taxation, they cautioned, is not reducing overall tobacco consumption but rather shrinking the legal market and diverting consumer demand to illicit channels that operate outside regulatory oversight.
Farmers highlighted Andhra Pradesh's pivotal position as a major FCV tobacco-producing state, with lakhs of families dependent on cultivation and allied economic activities. These supporting industries include curing facilities, grading operations, transportation networks, warehousing infrastructure, processing units, and export businesses. Continued market disruption, they warned, could destabilize rural livelihoods across multiple districts that have developed around tobacco cultivation over generations.
Appeal for Government Intervention and Market Stability
Urging immediate intervention, the farmers appealed directly to Chief Minister Naidu to take up the matter with the Union government and seek a rollback of the cigarette excise hike. They framed their request in terms of protecting farmer livelihoods, preserving rural employment, maintaining state revenue streams, and ensuring the long-term sustainability of the legal tobacco trade that operates within India's regulatory framework.
The Chief Minister responded by assuring the delegation that their concerns would be examined seriously and raised with appropriate authorities at the Centre. This commitment from the state's leadership provided some reassurance to farmers who have been facing mounting uncertainty about their economic future in the tobacco sector.
Farmers expressed hope that timely government intervention would help restore market stability, protect farmer incomes, curb the growth of illicit trade networks, and ensure stable revenue flows for both state and central governments. The meeting represents an important dialogue between agricultural stakeholders and political leadership on balancing taxation policies with economic realities in specialized crop sectors.
