Tobacco farmers across India are staring at an unprecedented crisis following a more than 70% hike in taxes on cigarette products.
These abrupt and disproportionate tax measures have destabilised the entire tobacco ecosystem, bringing auctions to a halt, forcing traders out of the market, and pushing lakhs of farming families into deep uncertainty.
According to the Federation of All India Farmer Associations (FAIFA), the sudden tax increase has led to a near-total withdrawal of traders from auctions, particularly in Karnataka, where repeated auction sessions have been postponed due to lack of buyers.
The ripple effects are now being felt in Andhra Pradesh, with buyers reluctant to participate amid policy uncertainty and rising costs.
FAIFA said farmers are facing a “triple crisis”: prolonged delays in auctions, reduced exports due to loss of global competitiveness, and punitive taxation that has weakened the legal cigarette trade while fuelling instability. With the marketing season advancing, growers are left holding unsold produce, mounting debts and growing distress.
With January 30 marked as the last day for timely intervention, farmer organisations warned that further delay could push the sector into a national crisis.
Tobacco supports the livelihoods of an estimated 45 million Indians, and any prolonged disruption could devastate rural economies and encourage illicit trade, they said, urging the Centre to immediately review the tax hikes and facilitate the resumption of auctions.
In an unusual show of unity, tobacco associations from across the country have made joint representations to the Prime Minister, Finance Minister and Commerce Minister, as well as to state chief ministers and Members of Parliament. Farmer leaders, along with the Chairman of the Tobacco Board, have also met the Union Finance Minister, seeking rationalisation of taxes to ensure revenue neutrality and revive auctions.
Chief Ministers of Andhra Pradesh and Karnataka have assured farmers that the issue will be taken up urgently with the Centre, while opposition leaders have advised their MPs to raise the matter in Parliament, citing its impact on employment, exports and government revenue.