Presenting the budget in the Lok Sabha on Saturday, Finance Minister Nirmala Sitharaman proposed hiking the National Calamity Contingent Duty (NCCD) on cigarettes and other tobacco products. However, no increase in duty was proposed on bidis.
In a statement, the farmers' body said that the duty hike is a major setback for the FCV (Flue Cured Virginia) tobacco farmers who have been fighting torrential and unseasonal rains this year in Andhra Pradesh and Karnataka.
"We did not expect such NCCD hike from the government even after you were made aware of our current situation through several representations and appointment requests to appraise you in the past few months regarding ground level realities of the struggles and losses that are being faced by FCV farmers' due to crop damage and also smuggled and illegal cigarette markets," it said.
FAIFA also said that consistently increasing taxes on cigarettes offer a lucrative arbitrage opportunity for evading taxes, which has led to a rise in illegal trade of cigarettes in the country over the years. The steep tax hikes since 2012-13 have led to a 36 per cent increase in illegal cigarette trade, increasing from 1,950 crore sticks in 2011 to 2,650 crore sticks in 2018.
"It is a death bed to all the FCV tobacco farmers' when trusting and relying on government is not yielding the required results, whereas unorganised sectors like bidi industry was free of tax burdens," the statement said.
It further noted that the government has also removed tobacco export incentives, making India a weaker competitor in the global market, while other countries, including Zimbabwe and Malawi, are encouraging their tobacco farmers by providing incentives and subsidies.
This lack of support from the government is resulting in reduction in crop size and farmers voluntarily exiting FCV tobacco cultivation, FAIFA said.
"In this backdrop, the present NCCD hike is levied only on tobacco and it is against the fundamental principles of GST (Goods and Services Tax), hence we request the Finance Minister to reconsider and withdraw the NCCD hike on tobacco," it added.
( With inputs from IANS )