Indian agrochemical industry seeks Atmanirbhar push via incentives, lower GST, plug-and-play industrial

In a bid to boost domestic manufacturing and reduce imports, the government is exploring tax breaks, fiscal incentives and regulatory reforms for the agrochemical sector. It's learnt that Niti Aayog, Agriculture Ministry and Commerce Ministry have sought suggestions from industry to prepare a roadmap for self-reliance in agro-chemicals space. 

The Indian agrochemical industry has the potential to double in five years to $11 billion, however, it is currently heavily dependent on imports from other countries. India imports agrochemicals worth over  Rs 3,000 crore from China. The broader push towards domestic manufacturing is in line with Prime Minister Narendra Modi’s vision to make India self reliant. 

It's learnt that fiscal incentives like corporate tax exemption for new units, reduction in GST rates, incentives for R&D have been sought besides plug-and-play industrial parks and wider reforms in Insecticide Act and Pesticides Management Bill, 2020.

The industry has pressed for lowering of the goods and services tax (GST) rate from 12 per cent to 5 per cent for agrochemicals, in line with the rate of seeds and fertilisers. Currently, Seeds attract nil GST rate, and fertilisers attract 5 per cent.

“Corporate Tax cut exemptions, export input tax rebate of up to 15 per cent, restoration of 200 per cent weighted deduction of expenses on research and development are among other demands to enable Indian industry to compete with China,” a source said. 

Change in regulatory and policy reforms are also suggested to enable fresh investments. Sources tell ET Now, among demands made by industry reforms in Insecticide Act and review of price controls of Pesticides Management Bill, 2020 is also sought. “A globally compliant IPR regime and registration processes are also needed,” the source added. 

He said the industry has also suggested plug-and-play industrial parks for agrochemicals with ready environmental clearances to set up new business, along with a complete overhaul of the Central Insecticides Board-Registration Committee to make its working more transparent, balanced, and technically sound.