The latest meeting of the GST Council sought to advance reforms that balance fiscal priorities with social well-being. However, its recommendations on tobacco and sugary beverages represent a worrying setback for public health. If adopted, these measures would weaken India’s ability to curb two of the most pressing health challenges of our time: tobacco-related diseases and diet-related non-communicable diseases (NCDs).
The most worrying proposal is the reduction of GST on bidis from 28 percent to 18 percent, coupled with a steep cut on bidi wrappers (tendu leaves) from 18 percent to 5 percent. This is not a minor adjustment; it fundamentally undermines decades of progress in tobacco control. Bidi remains the second most commonly consumed tobacco product in India.
As of 2017, about 72 million Indians aged 15 and older smoked bidis, accounting for nearly 8 percent of the adult population. Unlike cigarettes, bidis contain less processed tobacco, but this does not make them safer as they deliver higher concentrations of nicotine. Research has firmly established bidi smoking as a cause of cancers of the oral cavity, lungs, larynx, and esophagus, as well as chronic respiratory conditions and tuberculosis. The economic toll is equally staggering. A 2017 estimate put the annual costs attributable to bidi smoking at ₹805.5 billion for individuals aged 30-69 alone— roughly 0.5 percent of India’s GDP. Yet despite this enormous burden, bidis are taxed at disproportionately low levels.
Under GST, the total tax burden on bidis stands at a mere 22 percent, compared to 52 percent on cigarettes and 64 percent on smokeless tobacco. Bidis are not subject to the GST compensation cess, unlike other tobacco products. The proposed rate cut will widen this already unjustified gap. This preferential treatment lacks any public health rationale.
Bidi smoking is concentrated among lower socio-economic groups, who are particularly price-sensitive. Evidence shows the own-price elasticity of bidi demand is -0.9, meaning a tax cut will directly translate into higher consumption among the poor. This is not only regressive, but also cruel: it increases illness and healthcare costs in communities least able to bear them, locking households into cycles of ill health and poverty. India is a signatory to the WHO Framework Convention on Tobacco Control, which recommends uniform and high taxation across all tobacco products. By slashing bidi taxes, India would be acting in direct contradiction to its international commitments and undermining its own national tobacco control objectives.
The council’s recommendations on sugary beverages also reflect a troubling inconsistency. While raising GST on carbonated drinks to 40 percent is welcome, reducing GST on fruit juices from 12 percent to 5 percent undermines this progress. Moreover, the recommendations also include reducing GST on several sweet and salty foods, which are major risks contributing to India’s growing burden of NCDs.
Fruit juices—whether with added sugars or marketed as ‘100 percent natural’— are often high in free sugars that drive excess calorie intake and metabolic risk. Evidence shows little difference between the harms from sugar in sodas and juices; both are linked to obesity, diabetes, and cardiovascular disease. The WHO urges cutting free sugars from all sources, including juices.
India is already witnessing a steady rise in the consumption of sugar-sweetened beverages. Over the past decade, households have shifted from carbonated drinks to fruit juices. By lowering taxes on juices, the council risks accelerating this trend, substituting one harmful product with another. This is precisely why public health experts recommend sugar-content-based taxation, ensuring that all beverages with high sugar levels—carbonated or not—are taxed equitably and heavily.
We cannot afford to send contradictory messages on products that are leading drivers of disease. Tobacco use kills over a million Indians annually, while rising sugar consumption is fueling epidemics of obesity and diabetes. These are not isolated health problems; they are macroeconomic issues, draining household resources and burdening public health systems.
A rational tax policy should therefore have three objectives: one, discourage consumption of harmful products by making them less affordable; two, generate fiscal resources that can be earmarked for public health programmes; and three, promote health equity by protecting vulnerable populations who are most at risk from both consumption and financial hardship due to healthcare costs. For tobacco, this means raising GST rates on all products—including bidis, cigarettes, and smokeless tobacco—to the proposed peak of 40 percent, while also introducing or increasing specific excise duties. For sugary drinks, both carbonated and noncarbonated, taxation should be aligned with sugar content.
Countries such as the Philippines and South Africa have successfully implemented such tax regimes, using the revenues to fund health promotion campaigns and subsidise healthier alternatives. India, with its large population and growing burden of diseases, stands to gain even more from such a strategy.
Rijo M John | Health economist and Professor, Rajagiri College of Social Sciences, Kochi
(Views are personal)