FAIFA has urged the Center not to raise cigarette taxes any further

The Federation of All India Farmer Associations (FAIFA) has urged the Center not to raise cigarette taxes any further.

The association says that the price of legal cigarettes in the country has reached its highest point in relation to what people can buy. This appeal was made by the association ahead of the upcoming Union Budget for 2023-24.

FCV tobacco cultivation has been impacted

‘Any further increase in taxes would result in a significant reduction in FCV tobacco cultivation and impact the livelihoods of thousands of farmers,’ said Yashwanth Chidipothu, FAIFA’s National Spokesperson.

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A report by Euromonitor International says that the number of illegal cigarettes rose by 44 percent, from 19.5 billion sticks in 2011 to 28.1 billion sticks in 2020.

‘This increases the country’s illicit cigarette market share to 27.6 percent in 2020, up from 21.3 percent in 2015,’ he said.

This has resulted in a 39% decrease in FCV (flue-cured virginia) tobacco crop size to 194 million kg (a year) in 2021-22 from 316 million kg (a year) in 2013-14. During the period, the area shrank from 2.21 lakh ha to 1.22 lakh ha.

‘As a result, 35 million man-days of employment have been lost,’ he stated.

According to the association, legal cigarettes have become unaffordable in the country.

‘Tobacco farmers are under pressure as consumers shift to smuggled cigarettes that do not contain domestic tobacco,’ said Gadde Seshagiri Rao, ex-vice chairman of the Tobacco Board and vice president.

FAIFA General Secretary Murali Babu said that putting a tax on cigarettes to make them more expensive and discourage smoking had put the livelihoods of FCV tobacco farmers at risk.

‘There is no clear evidence to show that tobacco consumption is declining because a drop in legal cigarette demand is matched or even exceeded by an exponential rise in the illicit cigarette market and growth in demand for other forms of tobacco,’ he argued.

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The association says that FCV tobacco has been one of the biggest sources of foreign exchange. Tobacco worth more than ₹6,500 crores was exported in 2021.

‘Indian FCV tobacco has a new opportunity in the global market as a result of its newfound use in medicines for several autoimmune and inflammatory diseases, including diabetes,’ the company claimed.