FICCI calls for reduction of GST on agrochemicals to 5 per cent

New Delhi

As crop protection solutions are crucial for proper management of crop health for higher productivity and income of farmers and sustained growth of the agriculture sector, FICCI said on June 22 that the Goods and Services Tax (GST) Council should consider the agrochemical industry request seeking reduction of the tax rate on agrochemical inputs for the farm sector from the current 18 per cent to 5 per cent at the maximum.

The 47th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, will be held in Chandigarh on June 28-29.

Addressing the press conference on ‘Policy Landscape for a Flourishing Agrochemicals Industry’, organized by FICCI, RG Agarwal, Chair of FICCI Committee on Crop Protection and Chairman of Dhanuka Group, said that a high GST on crop protection chemicals especially hurt small and marginal farmers by increasing their input cost and prompting them to use these essential ingredients in sub-optimal quantities to the detriment of farm output and their own financial health.

"A GST of 18 per cent on agrochemicals is highly unjustified since they act as insurance to not only crop health but also increase their quality, yield and income of farmers. This high rate of 18 per cent is not justified and it should be brought down to a maximum of 5 per cent at par with fertilizers.”

Dr Charudatta Digambar Mayee, a former Agriculture Commissioner, opined that the agrochemical industry acted as a backbone to our farmers and assured them of high yield with better-quality produce while mitigating crop losses. In view of the climate changes and emerging threats of pests and diseases, there is an urgent need to overhaul the regulatory system for the introduction of new and innovative chemistries and technologies. There is also an urgent need to improve the enforcement mechanism at several levels to ensure the supply of high-quality agrochemicals to farmers on a sustainable basis. 

"This can be achieved with the cooperation of the private sector in addition to hiring adequate manpower and strengthening government laboratories, providing the latest analytical instruments, reference standards and making ISO 17025 NABL certification mandatory as done under (the) FSSAI Act as well as support from (the) Quality Council of India or other independent organizations,” said Dr Mayee.

"The Government must undertake total reforms in the working of the CIB&RC (Central Insecticide Board and Registration Committee) and advise them to implement the decisions taken in the various RCs at the earliest in a transparent manner," he added. The reform should expedite the registration of new molecules to increase the quality of produce, yield and farmers’ income.

Effective and timely implementation of regulatory decisions by the government will help the agrochemical sector become more efficient in delivering solutions that benefit the agriculture sector in a sustainable manner.

The Government has declared pesticides as a champion sector and hence it is essential to align Indian legislations with international laws with a view to attracting new technology and investment from developed countries. Therefore, it is also pertinent to relook at certain provisions of the draft Pesticide Management Bill (PMB 2020), which was prepared pre-Covid times.

FICCI is organizing its 11th Agrochemicals Conference 2022 on the theme ‘Policy landscape for a flourishing agrochemicals industry’ in New Delhi on June 23.