Crop Care Federation of India (CCFI) who are the largest manufactures and exporters of pesticides are of the firm view that present GST of 18% on pesticides is logically justified. Any reduction, the Indian manufacturers will suffer as all the raw materials, containers, plant and machinery, PPE kits and major investments are at 18 % GST.
“This would result in inverted duty structure,” stated Deepak Shah, Chairman CCFI in an earlier communication to Nirmala Sitaraman, Chairperson, GST council, which would be detrimental to Indian manufacturers who have the capability and capacity to manufacture locally quality pesticides, rather than depend on imports.
“This rate covers more than 90% of the goods and services which are subject to GST. Similarly about 90% of the final products and services sold by the industry across the value chain are at this rate of 18% with the aim to provide a balancing and seamless flow of credit and its utilisation. It also avoids the distortion caused due to inverted duty structure” added Shah.
For the pesticides which are imported, if they have 5% GST or lower, they will have a distinct advantage against indigenous manufacturers. The step would result in non-playing field and go against the policy towards Atmanirbhar Bharat through ‘Make in India’ This is will result in increase in imports of agrochemicals which during 2022-23 touched Rs. 14,315 crore mainly from China, Japan, Israel, Thailand, Europe, Hongkong etc. These quantities were much higher than the captive consumption of the importers and presumably for resale. Several shipments were delayed due to non-availability of containers, increase in tariffs rates and congestion at ports which have started arriving now in the current fiscal.
Indian manufacturers are responsible for 80% of our agrochemicals exports to over 140 countries with acceptable quality specifications. In fact we have exports pegged at Rs. 43, 224 crore, higher than domestic consumption estimated at Rs. 36,000 crore.
“Any reduction or exemption would result in loss of revenue estimated at Rs. 4680 crorer or more annually to the center and state governments, besides blocking of working capital which would increase cost of business. Besides as has been observed, the Government has been working to prune GST exemptions during their GST council meetings. At CCFI we work towards policies favouring the farming community where our members can produce better quality than their imported counterparts at 30-75% lower cost of production and save valuable foreign exchange” said Harish Mehta, Senior Advisor CCFI. Sharing his experience he further added that the dealers invoices to farmers are at net rate including GST where the benefit is seldom passed on to the beneficiary.
It would be factually incorrect to compare with other agri inputs where there is an element of subsidy.
- Bulk fertilisers and water soluble Fetilisers @18%
- Tractors & farm equipment/machinery @18%
- Micronutrients @18%
- seeds nil
On farm equipment and fertilisers, government gives subsidy to farmers and therefore there is no point in charging GST of 18% and then giving subsidy, whereas this is not the case for pesticides.
“We strongly recommend that there should not be any change in GST rates for pesticides manufactured in India as Wouk members are committed to ‘Make in India’ towards Atmanirbhar Bharat,” Deepak Shah concluded.
Source: Indian Chemical News
