CCFI Opposes Reduction in GST on Agrochemicals, Citing Harm to Indigenous Manufacturers
27 January 2025, New Delhi: The Crop Care Federation of India (CCFI) has voiced its strong opposition to any reduction in the existing Goods and Services Tax (GST) rate of 18% on agrochemicals. The organization argues that maintaining the current GST slab is essential to protect domestic manufacturers, ensure a level playing field, and avoid significant revenue losses for the government.
In a communication to Finance Minister Nirmala Sitharaman, Chairperson of the GST Council, Mr. Deepak Shah, Chairman of CCFI, stated, “Any reduction in the GST rate will result in an inverted duty structure, adversely affecting Indian manufacturers. Local producers, who have the capacity and capability to manufacture quality pesticides, would struggle to compete with imports, as all raw materials, containers, plant and machinery, and personal protective equipment (PPE) kits are subject to 18% GST.”
Mr. Shah emphasized that the current GST rate of 18% is applicable to over 90% of goods and services, enabling a seamless flow of credit and avoiding distortions caused by an inverted duty structure. “Reducing the GST rate on imported pesticides to 5% or lower would give importers a distinct advantage, creating an uneven playing field and undermining the government’s ‘Make in India’ initiative,” he added.
Potential Impact on Imports and Domestic Industry
CCFI highlighted that the reduction in GST could lead to a surge in agrochemical imports, which already reached ₹14,315 crore in 2022-23, with significant volumes coming from countries like China, Japan, Israel, Thailand, Europe, and Hong Kong. Many of these imports exceed the captive consumption of importers and are presumably intended for resale. The influx of imports could increase further, exacerbating challenges for indigenous manufacturers.
Indian manufacturers currently contribute to 80% of agrochemical exports, catering to over 140 countries, with exports valued at ₹43,224 crore, exceeding the domestic consumption estimated at ₹36,000 crore.
“Reducing or exempting GST would result in a revenue loss of approximately ₹4680 crore annually for the central and state governments,” said Mr. Harish Mehta, Senior Advisor, CCFI. “It would also block working capital, increasing the cost of business. Furthermore, experience shows that dealers seldom pass on the GST benefit to farmers, as invoices are often issued at net rates inclusive of GST.”
Comparison with Other Agricultural Inputs
CCFI addressed comparisons between pesticides and other agricultural inputs:
- Bulk fertilizers and water-soluble fertilizers: 18% GST
- Tractors and farm equipment: 18% GST
- Micronutrients: 18% GST
- Seeds: Exempt from GST
Unlike fertilizers and farm equipment, where subsidies are provided to farmers, pesticides are not subsidized. Thus, CCFI argues, the current GST rate of 18% on pesticides is logical and justified.
Commitment to Atmanirbhar Bharat
“Our members are committed to producing better-quality pesticides at 30-75% lower costs than imported counterparts, saving valuable foreign exchange and supporting the Atmanirbhar Bharat vision,” said Mr. Shah. “We strongly recommend that the GST rates for locally manufactured pesticides remain unchanged.”
The Crop Care Federation of India remains steadfast in its stance to safeguard domestic manufacturers and promote self-reliance in the agrochemical sector, urging the government to retain the current GST structure for pesticides.
Please reach out at info@krishakjagat.org, nimishgangrade@krishakjagat.org if you would like to share your company story or advertise in the upcoming issue of Global Agriculture magazine.
(For Latest Agriculture News & Updates, follow Krishak Jagat on Google News)
(+80 Million Farming Audience Visits Krishak Jagat’s Hindi Website – Click Here for Website)
