A cigarette currently retailing at around Rs 18 could cost close to Rs 70 to 72 once the higher duties are passed on. The impact, however, is unlikely to be uniform across categories. While premium cigarette brands may see relatively moderate price increases, mass-market products are expected to face the steepest pressure, given their higher price sensitivity.
Impact on tobacco companies
The sharp rise in prices could weigh on tobacco companies, especially those dependent on volume-driven segments. Although taxes collected per pack would rise, companies may face revenue pressure if consumers reduce consumption or exit the legal cigarette market altogether.
A sustained decline in volumes could also impact distribution networks and smaller retailers operating at thin margins. There is also a concern that some consumers might switch to unbranded or illegal tobacco products because of the higher prices.
Parliament has cleared amendments to the Central Excise Act, 1944, revising excise duty slabs and tax calculation rules for tobacco products. The bill, moved by Minister of State for Finance Pankaj Chaudhary, covers cigarettes, cigars, hookah, chewing tobacco, zarda and scented tobacco and has been approved by the Rajya Sabha before returning to the Lok Sabha. The revised excise structure is expected to push up cigarette prices sharply, particularly in the lower-priced segment.
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Public reaction
Public reaction to the proposed excise hike has been mixed. Some netizens welcomed the move. “As a smoker myself, I like this decision,” referring to the higher excise duties being applied to cigarette prices – See Post
Others responded with sarcasm. One user joked, “How does it even matter? I live in Delhi for free,” referencing the city’s notoriously poor air quality. See Post
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Union Finance Minister Nirmala Sitharaman said, “We certainly do not want cigarettes to become affordable,” during her reply to the discussion on the Central Excise amendments in the Lok Sabha on December 3, 2025. The revised excise rules reflect this policy, underscoring the government’s continued push to keep tobacco products expensive and discourage consumption.
