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    Excise Duty Hike Pushes Cigarette Prices Higher Across India

    13 hours ago

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    Cigarette prices across India have seen a sharp increase following the implementation of higher excise duties that came into effect from February 1, as part of the revised tax framework announced around Budget 2026. Distributors and retailers say the impact of the new duty structure is already being felt at the consumer level, with prices of several popular cigarette brands rising significantly.

    According to trade sources, the price of a standard pack of 10 cigarettes has increased by approximately ₹22 to ₹25, depending on the brand and size. Premium cigarettes, particularly those in the 76 mm category, are now being sold at higher rates, with distributors indicating that the revised prices range between ₹50 and ₹55 per pack of 10 sticks, over and above their earlier retail prices.

    Wholesale markets remained shut on Sunday, but distributors expect fresh stocks carrying updated maximum retail prices (MRPs) to begin reaching the market from Monday. While manufacturers are yet to formally issue revised MRP notifications, distributors have reportedly started billing retailers for existing stock at the new tax rates, which include a 40 per cent Goods and Services Tax (GST).

    Industry representatives say that companies have temporarily held back supplies in anticipation of billing adjustments under the new tax regime. Fresh consignments with printed revised MRPs are expected to be rolled out gradually, with full availability likely by the end of the month.

    Revised Prices for Popular Brands

    Distributors have shared indicative price changes for commonly sold cigarette brands. Mid-sized cigarettes, such as those measuring 76 mm and previously priced at around ₹95 per pack of 10 sticks, are now expected to retail at close to ₹120 per pack. Larger 84 mm cigarettes, including several widely consumed premium brands that earlier cost about ₹170 per pack of 10 sticks, may now be priced between ₹220 and ₹225.

    Slim cigarettes have also not been spared. For instance, slim variants sold in packs of 20 sticks, earlier priced at approximately ₹300, are now expected to cost around ₹350 per pack. Retailers say exact prices may vary marginally based on location and stock availability until the new MRPs stabilise across markets.

    New Duty Structure Explained

    The price increase follows the introduction of an additional excise duty on cigarettes and tobacco products, along with a health cess on pan masala. This new structure replaces the earlier system that included a 28 per cent GST along with a compensation cess on these products.

    Under the revised framework, short non-filter cigarettes of up to 65 mm length attract an additional duty of about ₹2.05 per stick, while short filter cigarettes of the same length are charged around ₹2.10 per stick. Medium-length cigarettes, ranging from 65 mm to 70 mm, face an extra duty of roughly ₹3.6 to ₹4 per stick. Longer cigarettes in the 70–75 mm category are subject to an additional duty of around ₹5.4 per stick.

    Only unconventional or non-standard cigarette designs fall under the highest duty slab of approximately ₹8.50 per stick, though industry sources note that most commonly sold brands do not fall into this category.

    Concerns Among Distributors and Retailers

    Trade bodies representing distributors have expressed concern that a sharp rise in prices could encourage the spread of illicit trade and counterfeit products. India has an extensive network of cigarette and tobacco distributors, with thousands of stockists and millions of small retail outlets dependent on legal sales.

    Industry representatives warn that excessive taxation on legally sold tobacco products could adversely affect traditional brick-and-mortar retailers, who are already facing competition from other segments of the retail market. They argue that any shift towards illegal supply chains would hurt both small shopkeepers and government revenue.

    Looking Ahead

    While public health experts have long advocated higher taxes on tobacco products as a deterrent to consumption, the immediate effect of the latest excise duty hike is a noticeable increase in retail prices. Market participants expect some initial disruption in supply as manufacturers and distributors adjust to the new tax structure. However, pricing is likely to stabilise once fresh stocks with updated MRPs become widely available.

    For now, consumers can expect to pay more for cigarettes across most brands and categories, marking another significant shift in the cost of tobacco products in India following Budget 2026.

     
     
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