New Delhi, 4 December 2025 – The Consumer Choice Center (CCC) cautions that the government’s move to reintroduce excise duty on cigarettes, framed as a measure to prevent “affordability” could drive consumers toward illicit tobacco, undermine public health goals, and harm low income Indians.
While Finance Minister Nirmala Sitharaman stated that cigarettes “must not become affordable” as the GST compensation tax draws to an end, CCC warns that recurring tax escalations have historically widened the gap between legal and illegal markets, harming both consumers and legitimate businesses, and has the harmful effect of taxing lower income individuals at a higher rate.
Shrey Madaan, Indian Policy Associate at the Consumer Choice Center, emphasised that well-intentioned tax policy must reflect onground realities:
“Making cigarettes more expensive on paper does not guarantee lower smoking in practice. When taxes rise faster than incomes, consumers don’t quit, they just shift. India has seen this for years: legal packs get costlier, the black market gets richer, and public health outcomes don’t improve. The goal should be reducing harm, not pushing ordinary consumers into an unregulated market.”
The Central Excise (Amendment) Bill reinstates a value-based levy of ₹2,700 to ₹11,000 per thousand sticks, in addition to the existing 40% GST, which represents a 25 – 40% increase over current effective taxes, leading to higher retail prices across brands.
Key concerns highlighted by the CCC include:
- Illicit Trade Will Surge Further
India already has one of the world’s largest illegal cigarette markets. Each aggressive tax jump widens the price gap between legal and illicit products, incentivising smuggling and counterfeit production, items with zero quality control and no contribution to tax revenue. - Regressive Impact on Low-Income Consumers
Sin taxes disproportionately burden lower-income groups. Instead of reducing consumption, higher prices often divert household income from essential spending or push smokers toward cheaper, counterfeit alternatives. - Missed Opportunity for Harm Reduction
- India continues to overlook less harmful nicotine alternatives such as regulated vaping products. Without providing safer options, steeper taxes simply trap consumers in more dangerous patterns of use.
- Market Distortion Without Proven Health Gains
Despite repeated tax hikes over the past decade, cigarette affordability, once adjusted for rising incomes, has barely changed. Meanwhile, illicit sales have skyrocketed with GST authorities reporting that seizure of smuggled cigarettes have more than doubled between 2019 – 2024. The intended public-health benefit does not materialise while market distortions become worse.
Madaan concluded:
“India cannot tax its way to better health without offering people safer pathways out of smoking. Evidence from around the world shows that smart regulation and harm-reduction tools work not blanket tax aggression that only strengthens illegal networks. A stable and predictable tax framework is better for consumers, better for enforcement, and better for long-term public health.”
The Consumer Choice Center urges policymakers to adopt a balanced strategy that targets harmful behaviour without penalising consumers or driving legal businesses out of the market. Evidence-based tobacco control should pair reasonable taxation with credible harm-reduction alternatives, stronger enforcement against smuggling, and consumer-centric policies.
