Chandrababu Naidu bats for tobacco, aqua farmers; writes to Centre on tax relief
Synopsis
Andhra Pradesh CM Chandrababu Naidu has simultaneously escalated two agrarian crises to New Delhi — a cigarette tax regime crushing 43,000 tobacco farmers, and a 60 per cent effective US tariff burden threatening ₹25,000 crore in shrimp exports and the livelihoods of 30 lakh workers. With TDP as a key NDA ally, the Centre's response will test how much political weight coalition partners carry on state-specific economic grievances.
Key Takeaways
Andhra Pradesh CM N.
Chandrababu Naidu wrote to Nirmala Sitharaman and Piyush Goyal on 18 May seeking relief for tobacco and aqua farmers.
GST on cigarettes raised from 28% to 40% from 1 February 2026 ; tobacco auction price fell from ₹280 to ₹250 per kg this season.
Livelihoods of nearly 43,000 FCV tobacco farmers and hundreds of thousands of workers are at risk.
A 50% US tariff on shrimp has pushed the total tax burden on Indian exports to 60% , threatening ₹25,000 crore in aqua exports.
2.5 lakh aqua farming families and over 30 lakh workers in Andhra Pradesh face potential livelihood loss.
Naidu has sought a ₹100 crore NFDB corpus fund , a 240-day interest moratorium , and inclusion of prawns in the Indian Armed Forces diet.
Andhra Pradesh Chief Minister N. Chandrababu Naidu on Sunday, 18 May wrote separate letters to Union Finance Minister Nirmala Sitharaman and Commerce & Industry Minister Piyush Goyal, urging the Centre to review revised taxes on cigarettes and take urgent steps to shield crisis-hit aqua farmers from the fallout of steep US tariffs. The dual appeal underscores mounting agrarian distress in one of India's most agriculture-dependent states.
Tobacco Farmers Under Pressure
Naidu highlighted the acute difficulties faced by Flue-Cured Virginia (FCV) tobacco farmers in Andhra Pradesh following a revised tax regime on cigarettes that took effect on 1 February 2026. The GST rate on cigarettes was raised from 28 per cent to 40 per cent, compounded by a hike in excise duty ranging from ₹2,050 to ₹8,500 per thousand cigarettes depending on category and length.
The Chief Minister flagged a 'tax-on-tax' compounding effect — involving GST, Excise Duty, and the National Calamity Contingent Duty — that has significantly slowed market purchases. As a direct consequence, the opening auction price for tobacco dropped from ₹280 per kilogram last year to ₹250 per kilogram this season. Companies purchasing tobacco have simultaneously reduced procurement volumes, squeezing farmer incomes further.
Naidu warned that the livelihoods of nearly 43,000 farmers and hundreds of thousands of dependent workers are currently at risk. He also cautioned that excessive taxation on legal cigarettes raises the risk of illicit tobacco products flooding the market — a concern that trade analysts have flagged in similar contexts globally.
Aqua Farmers Face Export Crisis
In a separate letter to Minister Piyush Goyal, Naidu raised alarm over the crisis gripping Andhra Pradesh's shrimp export sector. A 50 per cent tariff imposed by the United States on Indian shrimp exports has pushed the overall tax burden on Indian exporters to 60 per cent, severely undercutting their competitiveness in the world's largest shrimp import market.
Aqua exports from Andhra Pradesh are currently valued at ₹25,000 crore, and the Chief Minister warned of potential losses across this entire base. Prices for aqua products have already fallen 20–25 per cent even within the domestic market, compounding the pressure on producers. According to Naidu's letter, 2.5 lakh aqua farming families and over 30 lakh workers in the state face the threat of losing their livelihoods.
State Relief Measures Already in Place
Naidu noted that the Andhra Pradesh government has already taken initial steps to cushion the blow. The state has reduced the price of shrimp feed by ₹9 per kilogram and is supplying electricity to aqua farmers at a subsidised rate of just ₹1.50 per unit. However, he stressed that state-level relief is insufficient without central intervention, given the scale of the US tariff shock.
What Naidu Has Asked the Centre to Do
Naidu's requests to the Centre span multiple fronts. On aqua farming, he sought an increase in working capital limits to 30 per cent, a 240-day moratorium on interest payments, and a temporary exemption from the 5 per cent interest charge and 5 per cent GST on aqua inputs. He urged the government to negotiate with the United States for tariff reduction and to actively develop alternative export markets including Russia, the European Union, and Australia.
He also appealed for prawns to be included in the dietary regimen of the Indian Armed Forces, an increase in the Kisan Credit Card limit to ₹1 lakh, and the introduction of special train services to transport prawns from southern to northern states. In a letter to Finance Minister Sitharaman, Naidu requested a ₹100 crore corpus fund through the National Fisheries Development Board (NFDB) for establishing a Prawn Producers Coordination Committee in Andhra Pradesh, along with an additional Regional Fisheries Institute in the state.
Notably, Naidu's Telugu Desam Party (TDP) is a key partner in the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government at the Centre, giving his letters additional political weight. Whether the Centre responds with substantive relief — or defers amid broader fiscal constraints — will be closely watched by farming communities across coastal Andhra Pradesh.
Point of View
Which means these requests carry implicit coalition leverage, not just administrative weight. Yet the tobacco tax hike was a Union Budget decision driven by public health optics and revenue targets; reversing or softening it would invite criticism and set a precedent for other states. On aqua farming, the US tariff problem is real and externally driven, but India's shrimp sector has long been over-concentrated in the US market — a structural vulnerability that state-level subsidies cannot fix. The more durable ask — market diversification toward Russia, the EU, and Australia — is also the harder one to execute quickly. The Centre's response will reveal whether coalition arithmetic translates into substantive policy movement, or whether Naidu's letters become another round of well-documented, unanswered appeals.
NationPress
11 Aug 2026
Frequently Asked Questions
Why are Andhra Pradesh tobacco farmers in distress?
Tobacco farmers in Andhra Pradesh are facing distress primarily because of a revised cigarette tax regime effective from 1 February 2026, which raised GST from 28% to 40% and increased excise duty to between ₹2,050 and ₹8,500 per thousand cigarettes. This has slowed market purchases and pushed tobacco auction prices down from ₹280 to ₹250 per kilogram, squeezing farmer incomes.
How has the US tariff affected Andhra Pradesh's shrimp exports?
The United States imposed a 50% tariff on Indian shrimp exports, pushing the total effective tax burden on Indian exporters to 60%. Andhra Pradesh's aqua exports, valued at ₹25,000 crore, are severely impacted, with domestic prices also falling 20–25%, threatening the livelihoods of 2.5 lakh aqua farming families and over 30 lakh workers.
What relief has Chandrababu Naidu sought from the Centre for aqua farmers?
Naidu has requested a 240-day moratorium on interest payments, an increase in working capital limits to 30%, temporary exemption from 5% GST and 5% interest charges, a ₹100 crore NFDB corpus fund, higher Kisan Credit Card limits of ₹1 lakh, and diplomatic efforts to reduce US tariffs and diversify exports to Russia, the EU, and Australia.
How many farmers are affected by the tobacco crisis in Andhra Pradesh?
According to Naidu's letter to the Centre, nearly 43,000 FCV tobacco farmers in Andhra Pradesh are directly at risk, along with hundreds of thousands of workers dependent on the tobacco sector.
What is the political significance of Naidu's letters to the Centre?
Naidu's Telugu Desam Party (TDP) is a key coalition partner in the BJP-led NDA government at the Centre. His letters carry added political weight because of this alliance, making the Centre's response a signal of how much influence NDA partners wield on state-specific economic concerns.
