AP Asks Centre to Slash Raw Tobacco GST from 40% to 28%

The Andhra Pradesh government has urged the Centre to reduce the Goods and Services Tax (GST) on raw tobacco from the existing 40% to 28%, arguing that the move would ease the financial burden on farmers, stabilize the tobacco trade, and enhance India's competitiveness in global export markets. A delegation of state ministers and Members of Parliament submitted the request to Union Finance Minister Nirmala Sitharaman during a meeting in Parliament on Tuesday.

The delegation, led by Agriculture Minister Kinjarapu Atchannaidu, met the Union Finance Minister following the directions of Chief Minister N. Chandrababu Naidu. The representatives highlighted the challenges being faced by tobacco growers in Andhra Pradesh, stating that the steep GST rate on raw tobacco (HSN Code 2401) has adversely affected the value of the state's Flue-Cured Virginia (FCV) tobacco, one of India's leading agricultural export commodities.

According to the delegation, reducing the GST to 28% would help protect farmers' incomes, improve liquidity across the tobacco supply chain, and bring greater stability to the sector. They stressed that the proposal is strictly limited to unmanufactured raw tobacco and does not seek any tax relief for manufactured tobacco products, which continue to attract higher GST rates and compensation cess.

The representatives further explained that a lower tax burden would benefit farmers, traders, dealers, processors, and exporters, while strengthening the international competitiveness of Indian tobacco. They urged the Centre to consider the request sympathetically and take an early decision in the interest of thousands of farming families dependent on the crop.

Andhra Pradesh is India's largest producer of FCV tobacco, contributing nearly 40-45% of the country's output. The crop is cultivated extensively in districts such as Prakasam, Bapatla, Palnadu, Guntur, NTR, Krishna, East Godavari, and West Godavari, supporting rural employment and generating significant export earnings. Industry stakeholders have also pointed to rising cultivation costs and stiff competition from other tobacco-producing nations, making policy support increasingly important for sustaining the sector.