Budget 2018: Disincentivise cigarette smuggling through tax policy

Ahead of the budget, farmers body FAIFA today asked the government to have a taxation policy that curbs cigarette smuggling, saying Indian tobacco growers are suffering due to it.

The Federation of All India Farmer Associations (FAIFA), claiming to represent farmers of commercial crops across Andhra Pradesh, Telangana, Karnataka and Gujarat among others, said steep increase in tobacco taxation in the recent past led to growth of smuggling of cigarettes in the country.

"We appeal to the government to have a taxation policy, that disincentivises cigarette smuggling," FAIFA General Secretary Murali Babu said in a statement.

FAIFA said seizure of smuggled cigarettes has doubled in the last two years indicating the increase in smuggling.

With the smuggled products cheaper, there has been a shift in consumption which affected Indian tobacco farmers adversely as the smuggled cigarettes do not use Indian tobacco, it added.

This has resulted in drop in earnings of Flue Cured Virginia (FCV) tobacco farmers which have shrunk cumulatively by more than Rs 3,300 crore since 2013-14, FAIFA claimed.

Babu said India has a huge and wide-spread dependence on the tobacco crop for livelihood.

"The socio-economic importance of tobacco and its employment-generation capacity should not be overlooked while framing tobacco taxation and regulatory policies in India," he added.