The Federation of Retailers Association of India (FRAI) has raised concerns over the recent sharp increase in excise duties on legal tobacco products, urging the government to reconsider the hike to protect small retailers. The association represents around 80 lakh micro, small, and medium retailers, many of whom rely on daily-consumption goods, including tobacco, for their livelihoods.

The Finance Ministry’s Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines Rules, 2026 imposed excise duties ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on cigarette length, effective from February 1. FRAI warns that such sudden price shocks disproportionately affect India’s informal retail sector, which operates on thin margins and high-volume sales.

FRAI Joint Secretary Gulab Chand Khoda highlighted that steep price hikes immediately reduce demand at the shop level, pushing consumers toward illegal alternatives. This shift threatens small shopkeepers’ income and undermines the stability of neighbourhood retail ecosystems.

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The association also cautioned that the price increase could negate broader macroeconomic benefits, including the objectives of GST 2.0, by reversing consumer confidence and reducing retail footfall. FRAI stressed that its concerns are not against taxation but advocate for calibrated, revenue-neutral, and price-stable policies.

FRAI emphasized that unchecked tax hikes could accelerate the proliferation of illicit markets, leaving legitimate retailers trapped between falling revenues and competitive pressure from unregulated operators. The group called for dialogue with authorities to ensure fair implementation while safeguarding livelihoods.

The association’s plea comes amid growing attention on small-scale retailers’ role in India’s economy, noting that sudden excise changes on widely consumed products risk disrupting the informal sector and broader retail stability. FRAI urged policymakers to balance revenue goals with economic and social sustainability.

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