Higher GST on pesticide to affect Indian farmers

Imposition of 18 per cent rate on pesticides under the Goods and Service Tax (GST) system has become a cause of worry not only for farmers but crop protection product manufacturers as well.

Manufacturers say it will increase agricultural input costs, putting additional burden on farmers as use of pesticides is essential owing to its role in controlling pest and increasing productivity.

As the current farming season is at the sowing stage, actual impact cannot be measured right now, but it will definitely have negative impact, said Rajshekhar Sakhalkar, Director of CropLife India.

CropLife India represents 14 Indian and multinational companies engaged in crop protection products.

"Before GST, the tax rate on pesticides was 14-15 per cent. We thought it would be between 5-12 per cent under the GST, but the government increased it to 18 per cent. It will add to input costs for farmers. The overall cost will then increase," Sakhalkar said.

A rice-grower from Allahabad, Rajkumar Pathik, said he was aware of the possible hike in prices of pesticide.

"It is sowing season now. So we have not bought pesticides yet. But there are talks among farmers that pesticides will become costlier due to higher taxes," Pathik said.

About the impact on the industry, Sakhalkar said: "We have to see how farmers behave towards such increase in prices. We will have to see how it overall works out for the pesticide industry. It will be interesting to see."

Rajasthan's Agriculture Minister Prabhu Lal Saini said last week that he would speak to the central government to bring the GST rate down.

"We expect this issue to be raised at the national level, which may benefit us as well. Since it is a basic need of farmers, its prices have to be brought down. Whenever new things come, there is scope for improvement. We will try to bring the issue to the Centre's notice," Saini had said during an event here.

Sakhalkar said the industry will also represent to the government.