FRAI leads small retailer protest against tobacco tax hikes in Delhi

Thousands of small retailers, hawkers and pavement vendors staged a protest in New Delhi on Wednesday, demanding an immediate rollback of what they termed excessive tax hikes on legal tobacco products and a re-notification of more “sensible” tax rates.

The agitation was led by the Federation of Retailers Association of India (FRAI), which said the recent duty increases have triggered a sharp price shock that threatens the survival of small businesses and the livelihoods of families dependent on them. FRAI representatives protested outside the Ministry of Finance, urging the government to reconsider the revised tax structure.

FRAI, which claims to represent nearly 80 lakh micro, small and medium retailers across the country through 54 retail associations spanning northern, southern, eastern and western India, said informal retailers operate on thin margins and have limited ability to absorb sudden cost escalations.

The protest follows a recent Ministry of Finance notification under the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026, which imposes an excise duty ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on cigarette length, effective February 1. The hikes come after the withdrawal of the compensation cess.

Retailers said the sharp increase would make legal tobacco products unaffordable for consumers, dampen demand, and push already struggling small sellers towards closure, while fuelling the growth of illicit and unregulated markets.

“Today we have come out because our lives are in danger. Sudden and big tax increases will make daily goods too costly for poor people and break the small shops that feed our families,” said Vinay Kumar, Secretary, FRAI. “If prices go up, customers will not be able to afford these products. We will lose income and illegal sellers will grow.”

Calling for a reassessment of the policy, Kumar added that small vendors want to earn an honest living and are seeking relief from abrupt taxation changes that threaten their dignity and survival.

FRAI said it was not opposed to taxation or public health objectives but urged the government to adopt a calibrated and predictable taxation framework that avoids sudden price shocks, ensures affordability of legal products, and safeguards millions of self-employed retailers forming the backbone of India’s informal retail economy.