Chandrababu Naidu seeks tax relief for FCV tobacco farmers; writes to Sitharaman, Goyal

Chief Minister N. Chandrababu Naidu has written separate letters to Union Finance Minister Nirmala Sitharaman and Union Commerce and Industry Minister Piyush Goyal on the hardships being faced by Flue-Cured Virginia (FCV) tobacco farmers in Andhra Pradesh because of the revised taxation policy on cigarettes.

The Chief Minister said the revised tax regime, effective from February 1, 2026, had adversely affected tobacco farmers in the State. He said the increase in GST on cigarettes from 28% to 40%, and a steep hike in excise duty ranging from ₹2,050 to ₹8,500 per 1,000 cigarettes depending on category and length, was affecting the interests of tobacco growers.

Mr. Naidu said the cumulative impact of GST, excise duty, and National Calamity Contingent Duty had slowed market purchases, creating uncertainty in the tobacco sector. He said the opening auction price of tobacco had fallen from ₹280 per kg last year to ₹250 per kg this season.

The Chief Minister also said that tobacco-buying companies had reduced procurement volumes, causing losses to farmers. Exporters were facing difficulties because of prevailing geopolitical conditions.

He warned that the livelihoods of nearly 43,000 tobacco farmers and lakhs of workers dependent on the sector were at risk. Mr. Naidu cautioned that excessive taxation on legal cigarettes could lead to an increase in illicit tobacco products in the market, and urged the Centre to review the revised tax policy and excise duty to protect farmers’ interests and stabilise the market.

Exports of tobacco and its products recorded a steep decline in April 2026 compared to the previous year, according to a recent Press Information Bureau (PIB) report. Tobacco exports stood at ₹1,690 crore in April 2025 and ₹1,102 crore in April 2026, a 34.81% decline.

Aqua sector also flagged

Mr. Naidu has separately written to the Union Ministers on the crisis facing the State’s aquaculture sector after the U.S. imposed a steep tariff on shrimp imports from India. He said the tariff had resulted in a nearly 60% tax burden on Indian exports, severely affecting aqua products exported from Andhra Pradesh.

“The tariff burden on shrimp exports is severely affecting aquaculture farmers and exporters in Andhra Pradesh and putting exports worth nearly ₹25,000 crore at risk,” he said in the letter, according to a release.

Mr. Naidu said about 2.5 lakh aquaculture farmer families and more than 30 lakh workers dependent on the sector were facing a livelihood crisis. Prices of aquaculture products in the domestic market had already declined by up to 25% amid the crisis, he said.

The State government had reduced shrimp feed prices by ₹9 per kg and was supplying electricity to the aquaculture sector at ₹1.50 per unit to support farmers, he said. Mr. Naidu sought an increase in working capital limits by 30%, a 240-day moratorium on interest payments, and temporary exemption from 5% interest and 5% GST.

Mr. Naidu also urged the Centre to hold talks with the U.S. to reduce tariffs and to expand exports to alternative markets such as Russia, the European Union, and Australia. He requested that shrimp be included in the food menu of the Indian Armed Forces, that the Kisan Credit Card limit be raised to ₹1 lakh for aquaculture farmers, and that a special railway facility be set up for transporting shrimp from southern to northern States.

(With inputs from PTI)