India farmers may be hit by higher GST rate on agro-chemicals

A large number of stockists and wholesale dealers of crop protection products in Tier-2 and Tier-3 towns are not GST-ready yet and this is likely to affect the availability of agrochemicals in July, a crucial month for sowing, said Rajesh Aggarwal, MD of Insecticides (India) Limited, on Thursday.

“As many of 4,000 customers haven’t been able to get their GST registration done so far and this may lead to disrupted supply of key agrochemical products for a good part of July,” Aggarwal said. “Around 50 percent of our business comes in July and August,” he added.

The crop protection industry is also peeved at the Government decision to slap 18 per cent tax on agrochemicals under the new GST regime and wanted parity with fertilisers, which are charged at 12 per cent. “Putting crop protection chemicals in a higher bracket increases the burden on farmers,” said Rajshekhar Sakhalkar, Director of CropLife India, a consortium of 14 agrochemical firms operating in India.

CropLife has already made a representation to the government requesting parity with fertiliser industry. But we are yet to hear from them, he said.

Currently agrochemicals attract an excise duty of 12.5 per cent and a VAT of 4 to 5 per cent in most states.

VAT is however exempted in agriculturally-important states such as Punjab, Haryana and Tamil Nadu, said Insecticide Ltd’s Aggarwal.