Overview On February 5, 2026 , tobacco traders in Karnataka resumed participation in state auction platforms after a brief boycott that began on January 24, 2026 . The boycott was a protest against the 18% central excise duty imposed on unmanufactured tobacco by the Ministry of Finance on December 31, 2025 . The levy was withdrawn on February 1, 2026 , the day the Union Budget was presented by Finance Minister Nirmala Sitharaman . This development has significant implications for growers, traders, exporters, and fiscal policy. Key Developments Withdrawal of the 18% excise duty: A fresh notification on February 1, 2026 rescinded the levy, prompting the Indian Tobacco Association to call its members back to auctions from February 5 . Stakeholder engagement: A delegation of tobacco farmers from Andhra Pradesh, Telangana and Karnataka , led by MP D. Purandeshwari and Tobacco Board Chairman Yashwant Kumar Chidipothu , met Finance Minister Sitharaman to voice concerns. Market response: Traders, who would have needed fresh registration for the duty, feared passing the tax burden to growers. The withdrawal is expected to stabilise prices, especially as over half of the 2025‑26 crop remains unsold. Important Facts Authorized crop size: 100 million kg of tobacco for the season, with an estimated yield of 85 million kg . Auction performance before suspension: About 41 million kg (≈45% of the crop) sold at an average price of ₹289‑₹290 per kg , roughly ₹23‑₹24 higher than the previous year’s average of ₹267 per kg . GST hike: The central government raised GST on tobacco products from 28% to 40% , affecting “sin” goods, while 80% of Karnataka’s tobacco is destined for export, making the GST impact on cultivators uncertain. UPSC Relevance This episode touches upon multiple UPSC syllabus areas: Taxation and Fiscal Policy (central excise, GST), Agricultural Economics (crop pricing, farmer protests), Industrial & Trade Policy (export orientation, market regulation), and Governance & Public Administration (policy reversal after stakeholder lobbying). Questions may appear in GS‑II (Economy) on indirect taxes, GS‑III (Agriculture) on crop marketing, or as a case study in Ethics & Integrity regarding responsive governance. Way Forward Policymakers need to balance revenue generation with farmer welfare. A transparent mechanism for taxing unmanufactured tobacco—perhaps through a modest excise coupled with export incentives—could prevent market disruptions. Continuous dialogue with farmer associations and exporters will be crucial, especially as the auction season may extend beyond the usual March deadline to accommodate unsold stock.