The duty evaded illegal cigarette market continues to grow unabated and the domestic industry is not able to counter the same due to high excise duties and steep incidence of VAT on legitimate cigarettes. "Measures need to be taken to enable the legitimate industry to effectively combat this menace and, simultaneously, provide some stability to farmer livelihoods," said FICCI in its Pre-Budget memorandum 2014-15.

Accordingly, the industry body has recommended the rate of Central Excise duty on the 65 mm filter cigarette slab be reduced from the existing level of Rs 689 per thousand cigarettes to Rs 200 per thousand cigarettes.

"It is anticipated that this will also have a salutary effect on tobacco tax revenue in addition to aiding the legitimate domestic industry in achieving the above-stated objectives through viable offers to consumers," it said.