From Rs 18 to Rs 72: Cigarette prices could quadruple under new excise bill

Excise duties on cigarettes, cigars and other tobacco products have been sharply raised, with officials estimating retail prices could rise several-fold.

• Parliament passed a bill raising excise duties on cigarettes and tobacco products.
• Cigarette prices may rise from Rs 18 to Rs 72 per stick due to new duties
• Excise on chewing tobacco jumps to 100 percent, hookah tobacco to 40 percent

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Cigarette prices in India are likely to rise steeply after Parliament approved the Central Excise (Amendment) Bill, 2025, clearing the way for a sharp increase in duties on cigarettes and other tobacco products.

The Bill, introduced by Minister of State for Finance Pankaj Chaudhary, revises excise rates across cigarettes, cigars, hookah tobacco and chewing tobacco, significantly raising the tax burden on smokers.

Under the amended law, excise duty on cigarettes will rise from the current Rs 200–735 per 1,000 sticks to Rs 2,700–11,000 per 1,000 sticks, depending on length and category.

Duties on chewing tobacco will increase to 100% from 25%, while hookah tobacco will attract 40% excise, up from 25%. Smoking mixtures will see the steepest jump, with excise rising fivefold from 60% to 300%.

Officials estimate that a cigarette currently priced at around Rs 18 could cost as much as Rs 72 once the higher duties are passed on to consumers.

India already levies some of the highest tobacco taxes in the region, but cigarettes remain relatively affordable compared to incomes, according to past government assessments. The latest hike signals a renewed push to use taxation as a public health tool, rather than incremental rate increases seen in recent years.

The move also has revenue implications, with tobacco remaining a significant contributor to indirect tax collections despite declining volumes.

The sharp hike triggered mixed reactions online, ranging from support to scepticism. Some users welcomed the move as a deterrent, while others questioned whether higher prices would meaningfully curb consumption or simply push users towards cheaper alternatives.

The revised excise duties will take effect once notified, after which manufacturers are expected to adjust prices. Industry response and consumption trends will determine the actual impact on volumes and tax collections in the coming months.