June 15, 2026
Overview:
Bidis are the most widely used smoked tobacco product in India and are linked to serious health problems. But they are taxed at much lower rates than cigarettes, and many small bidi manufacturers receive tax exemptions. This One Health Trust study explores how increasing bidi taxes and removing these exemptions could affect health, healthcare costs, and the economy over the next 50 years.
The Question:
What would happen if India increased bidi taxes, leading to higher prices, and removed tax exemptions for small producers?
The Findings:
The researchers modeled two scenarios, a 10 percent increase in bidi prices due to higher taxes and a 30 percent increase in bidi prices due to higher taxes. They also estimated the long-term effects on smoking rates, health outcomes, healthcare spending, government revenue, and economic productivity.
They found that higher bidi taxes could deliver major health and economic benefits.
- A 10 percent price increase could result in nearly 22 million additional years of healthy life and save about INR 560 billion in healthcare costs over 50 years.
- A 30 percent price increase could generate nearly 48 million additional years of healthy life and save about INR 1.2 trillion in healthcare costs.
- Higher taxes would also reduce productivity losses caused by illness and premature death, leading to broader economic gains.
- Government tax revenues from bidis would increase substantially, generating hundreds of billions of rupees in additional revenue.
- The largest overall benefits would be seen in India’s most populous states, while some smaller states would experience the greatest gains relative to their population size.
These findings suggest that increasing bidi taxes and eliminating tax exemptions for small producers could help reduce smoking, prevent tobacco-related diseases, lower healthcare costs, strengthen government revenues, and improve economic productivity.
Read the article in BMJ Tobacco Control here.
