The Federation of All India Farmer Associations (FAIFA) has appealed to the Union government to cut taxes on cigarettes and other tobacco products to arrest its smuggling.

Calling for immediate measures to put curbs on the smuggling of tobacco products, it said the government was losing heavily in taxes because of the huge inflow of smuggled products.

Citing a FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) report, it pegged the illicit tobacco market size at ₹22,930 crore. Losses resulting from unrealised taxes were estimated at ₹13,331 crore.

Welcoming the government’s move to cut duties on gold and high-end mobile phones to curb their smuggling, the FAIFA said that there was a plan to reduce the duty on gold imports to 12 per cent from 18.45 per cent.

“This will make gold cheaper in the Indian market and curb its smuggling,” said Javare Gowda, President, Federation of All India Farmer Associations (FAIFA).

He asked the government to take a similar move to curb cigarette smuggling.

“The reduction in taxes on legal cigarettes will not only reduce the huge tax loss for the government but also will bring relief to millions of our tobacco farmers who are dependent on the legal domestic industry,” Gowda said.

Illicit cigarettes are in big demand across the country and currently exceed 1/3rd of legal volumes. A tax cut will drastically reduce this market, he pointed out.

Murali Babu, General Secretary of FAIFA, said that the farming community was under stress as consumers were shifting to smuggled cigarettes. This thriving illicit market is encouraged by high taxation and extreme regulation of the legal cigarette industry, he argued.

Citing the FICCI report, Babu claimed that the amount of losses in taxes to the government doubled to ₹13,331 crore in 2020 as against ₹6,240 crore 2012.