If farmers matter, so should tobacco FDI

EVERY BUDGET SEASON arrives like a Bollywood sequel: familiar cast, recycled dialogues, glossy new poster.

- M MUNEER

“Doubling farmer incomes.” ‘Rural resilience.’“Value addition.” Cue applause. Yet when policy choices become politically uncomfortable, these promises often dissolve into moral posturing. Few sectors expose this contradiction more starkly than tobacco.

If improving farmers’ quality of life is truly the objective, then allowing foreign direct investment in tobacco processing—particularly in reduced-risk and export-oriented products—should not be taboo. It should be considered pragmatic economics.

India’s Flue-Cured Virginia (FCV) tobacco farmers are currently enjoying unusually strong auction prices, averaging around ₹270/kg for the second consecutive year. But this windfall is not structural. It is the result of crop failures in Brazil, Zimbabwe, and Indonesia. As global supply normalises, prices will soften. Farmers who expand acreage in response to short-term gains risk returning to the familiar cycle of surplus, price crashes, and distress. The Tobacco Board’s caution against overproduction is well placed, but it also highlights a deeper vulnerability: India’s tobacco farmers remain hostage to global commodity swings because they export mostly raw or semi-processed leaf.