The Federation of All India Farmer Associations (FAIFA), a tobacco farmers body, has urged the Centre government to adopt a pragmatic approach on cigarette taxation as it is directly linked to the livelihoods of millions of tobacco farmers and farm workers.
FAIFA president Javare Gowda said that the increase in National Calamity Contingent Duty (NCCD) on cigarettes, proposed in the Union Budget 2020-21, will have an adverse impact on the livelihood of Indian Flue Cured Virginia (FCV) tobacco farmers as the tax increase will provide a further boost to the smuggled cigarette trade.
“The hike in tax is a major setback to the FCV tobacco farmers who have been fighting torrential and unseasonal rains this year in Andhra Pradesh and Karnataka. Indiscriminate increase in excise duty on cigarettes will result in reduction in legal cigarette production and this will reduce the tobacco purchases of domestic manufacturers, impacting market prices for farmers and putting more pressure on farmer’s earnings and causing further stress,” said Mr. Gowda in a statement, after a recent meeting with Union Finance Minister Nirmala Sithraman.
‘Encourage exports’
FAIFA has also appealed to the government to include Tobacco in Remission of Duties or Taxes on Export Product (RoDTEP) scheme and encourage exports through aggressive promotion schemes. The government removed tobacco export incentives, making India a less competitor in the global market, whereas other countries like Zimbabwe, Malawi, etc are encouraging tobacco farmers by providing incentives and subsidies, it said.
FAIFA vice-president G. Seshagiri Rao said that the body has also urged the government to take strict action against illegal market and totally curb the illicit trade in the country. “We also appeal that the proposed increase in NCCD is withdrawn and tax stability is maintained on legal cigarettes in order to contain the flourishing illegal cigarettes and safeguard the livelihood of tobacco farmers in the country,” he added.
