India has introduced a new excise duty on tobacco products from February 1, aiming to boost revenue and discourage consumption. This tax, added to the existing GST, varies by cigarette length and type, causing a sharp nationwide price increase.
India has rolled out a new excise duty regime on tobacco products, triggering a sharp rise in cigarette prices across the country from February 1. The change comes after the government replaced the earlier GST compensation cess with a revised excise structure, aimed at boosting revenue and discouraging tobacco consumption.
Under the new framework, cigarettes will now attract an additional excise duty over and above the existing 40 per cent GST. The duty varies depending on the length, filter type and category of the cigarette, with longer and premium variants facing the steepest hikes. Manufacturers and distributors have already begun passing on the higher tax burden to consumers, leading to noticeable increases at retail counters.
Industry executives have indicated that price revisions are already visible in several markets, with premium cigarette brands witnessing the sharpest escalation. The move is expected to impact consumer behaviour, particularly in price-sensitive segments, while raising concerns within the industry about the possible growth of illicit cigarette trade.
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According to reports, the revised excise duty structure has resulted in a significant jump in per-pack prices across categories, with increases ranging from moderate to steep depending on the product segment.
Price Impact Breakdown
• Short cigarettes (up to 65 mm) - Price increase of around ₹22–₹25 per pack of 10 sticks
• Medium-length cigarettes (65–70 mm) - Prices up by approximately ₹30–₹35 per pack
• Long cigarettes (70–75 mm) - Hike of about ₹40–₹45 per pack
• Premium cigarettes (76 mm and above) - Prices increased by ₹50–₹55 per pack
• Slim and premium imported variants (packs of 20) - Prices may rise by ₹45–₹55, depending on brand and length.
Retailers expect official MRPs to be updated by manufacturers in the coming weeks as inventories under the new tax regime stabilise. Meanwhile, consumers are already feeling the pinch as cigarette prices surge nationwide.
