Any reduction in GST rates on agrochemicals would benefit importers: Crop Care Federation of India

Crop Care Federation of India (CCFI) who are the largest manufactures and exporter of pesticides are of the firm view that present GST of 18% on pesticides is logically good. If it is reduced to 5 % or nil the Indian manufacturers will suffer as all the raw material containers, plant and machinery has 18 % GST. ″This would result in inverted duty structure″ stated Mr Deepak Shah, Chairman CCFI in a communication today to Ms 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.

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 go against the policy towards Atmanirbhar Bharat through ‘Make in India’ This is will result in increase in imports of agrochemicals  which during 2021-22 touched ₹13369 Cr mainly from China, Japan, Israel, Thailand, Europe,  Hongkong etc. Several shipments were delayed due to non availability of containers, increase in tariffs rates and congestion at ports which have started arriving in full flow now in the current fiscal.

Indian manufacturers are responsible for 80% of our agrochemicals exports to over 130 countries with acceptable quality specifications. In fact we have exports pegged at ₹ 35000 cr, higher than domestic consumption of ₹29000 cr.

 ″Any reduction or exemption would result in loss of revenue estimated at ₹ 4500 cr annually to the government, besides blocking of working capital which would increase cost of business. Also as has been observed, the Government has been lately 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 Mr HarishMehta, Senior Advisor CCFI.

″We strongly recommend that there should not be any change in GST rates for pesticides manufactured in India″. Mr Deepak Shah concluded.