Agriculture Industry

Appeal to Finance Minister: Justification to increase Basic Custom Duty on import of agrochemicals

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13 December 2023, New Delhi: Crop Care Federation of India (CCFI) has sent a pre-budget proposal to Finance Minister Nirmala Sitharaman last week and has asked for her intervention to curb the surge in imports of agrochemicals.

Harish Mehta, Senior Advisor, Crop Care Federation of India

The Indian industry is of a firm view that the present basic custom duty on technical and readymade formulations at 10% gives no incentive to Indian manufacturers who have the capacity and the capability to manufacture indigenously.

CCFI has suggested the imposition of a 30% customs duty on all formulation imports from China and elsewhere and a 20% customs Duty on imports of all technical grades to encourage domestic manufacturing and curtail unnecessary imports 

Sharing the latest figures on imports by MNCs and traders Mr. Harish Mehta, Senior Advisor CCFI, said “Substantial Imports prevented domestic manufactures of new technical grade pesticides as Indian companies could not obtain generic registrations also called as ‘me-too’ registrations. There has been an increase every year in imported formulations in quantities much higher than actual usage by the MNCs, traders &  importers, used mainly for resale which is non-permissible. The imports in 2022-23 stood at Rs. 14,760 crores thereby restricting the trade surplus to Rs. 29,520 crores. Newer molecules imported in the country as formulations are 2 to 2.5 times more expensive as compared to their manufacturing done in India, with profit margin as high as 200%.”

Informing the Hon’ble Finance Minister that though the agrochemical industry has been declared as a “Champion Sector” with a trade surplus tripling in the last 5 years, imports continue unabated with a heavy outgo of foreign exchange in dollar terms. Importing such formulations as compared to the import of Technical for local manufacturing in India is an undesirable situation. Besides MNCs work on a transfer price policy, meaning thereby the profits are parked in the native country before transporting the material.

‘Apprehension was expressed in quantifying the correct profile in an imported formulation. This could result in the supply of substandard material and the possibility of expired stocks with a toxic profile with no means to check, said Mr. Mehta.

The Finance Minister was apprised that without proper classification of HSN Codes, major imports of agrochemicals are under the ‘others’ category (estimated > 80%) for which dedicated HSN codes are required to be created on priority as only 55 products (agrochemicals) have specific HSN Codes as against 318 Technical grade and 820 Formulations.

Another mention has been made in the representation of the stringent implementation of the CAROTAR 2020 notification issued by the Ministry of Finance, Department of Revenue, such that importers cannot circumvent dispatches and surreptitiously route their material from other destinations like Singapore, Thailand, Malaysia, etc. by showing HSS (High Seas Sale), totally against the policy of “Make in India”.

The issue of import of formulation without registering Technical has also been highlighted as several developed countries like the USA, European Union, Brazil, Australia, Argentina, and even China do not permit such imports.

Mr. Mehta reiterated “CCFI members are committed towards Atmanirbhar Bharat through Make in India policy of the Government and we see a bright future for this industry. Our contention has been well understood by the bureaucrats and industry recommendation must be implemented in the coming budget or earlier “

Also Read: High Sugar Prices Create Signs of Substitution Among US Manufacturers

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