NEW DELHI -- A farmers body on Monday urged the Centre to reduce tax on the cigarette industry to enable tobacco growers to get the right prices for their crop.
The Federation of All India Farmer Associations (FAIFA) said the measure was required as the tobacco farmers' agricultural output was currently in less demand by the cigarette companies.
The association -- representing millions of farmers of commercial crops in India -- said tobacco provides livelihood to 4.6 crore farmers, farm labour, retailers and bidi workers.
It claimed that it was witnessing a continued onslaught in terms of punitive and sustained increase in taxation and impractical regulation over the past few years.
"We are very disturbed because of the declining off-take from the domestic manufacturers. The Indian tobacco exports are also sluggish and this has resulted in 22 per cent decline in the farmers' returns," said Murali Babu, General Secretary, FAIFA.
A Regulatory overreach has created panic and strain for the flue-cured Virginia (FCV) tobacco farmers in the country, he added.
For the first time in independent India, 22 FCV farmers have committed suicide in Andhra Pradesh, Telangana and Karnataka, Babu said.
According to the FAIFA general secretary, the suicides of tobacco farmers were a result of the excessive increase in the excise duties levied on tobacco products.
There was a cumulative increase of 118 per cent since 2012-13, leading to 22 per cent shrinkage in the legal cigarette volumes, Babu said.
"The steep increase in the excise duty has led to smuggling of cigarettes in the country due to the high tax arbitrage," he said.
India is the world's second largest producer and third largest exporter of tobacco, earning the country foreign exchange of more than Rs 6,000 crore.
"Any further tax increase on the already over-taxed legal tobacco industry will only accelerate the process of diversion of tobacco consumption into the illicit and the unorganized tobacco sector," Babu added.
"This would lead to adverse consequences on revenue collection and the tobacco control objectives of the government and serious implications on the farmers livelihood," he said.
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