Tobacco consumption remains a major public health and economic concern in India, particularly among young consumers who are more susceptible to addiction and social influences. In response to the harmful effects of tobacco use, the Indian government increased excise duties on cigarettes in 2026 under the Central Excise (Amendment) Bill 2025 with the aim of raising prices and discouraging consumption. This research investigates the extent to which this indirect taxation policy influences consumer purchasing behaviour and demand for tobacco products among young consumers in urban India. The study applies key economic theories including demerit goods, indirect taxation, price elasticity of demand, and behavioural economics to analyze how taxation affects consumer decision-making and market outcomes. A mixed-method approach is used, combining primary data collected through surveys of individuals aged 18–25 with secondary data from government reports, the World Health Organization, and academic studies on tobacco consumption in India. The research evaluates whether increased cigarette prices reduce consumption or instead lead to behavioural responses such as substitution toward cheaper tobacco products or continued consumption due to addiction. The findings aim to assess the effectiveness of excise taxation as a policy tool for correcting market failure associated with tobacco consumption and provide insights into the role of consumer behaviour in determining the success of public health interventions.
Shrina Bhalla (Wed,) studied this question.