18% GST on pesticides will increase farmer's burden

Farmers are not upbeat despite a heavy monsoon period expected which will enhance their harvest, as the proposed implementation of 18% Goods and Services Tax (GST) on pesticides will add to their existing plight.

Crop protection products are an integral part of the green revolution and play a crucial role in increasing agricultural productivity. Over the years, the Indian crop protection industry has made significant progress in terms of enhanced production capacity and integration of imported and indigenised technology to meet the overall requirement of crop protection products in India. As cultivable land shrinks, India will need modern agriculture sector to ensure food security.

To meet the foodgrain requirements of the nation, agricultural productivity and its growth needs to be further improved. In combination with Integrated Pest Management and Plasticulture techniques, agrochemicals play a critical role by providing pre and post harvest protection to crops and agricultural output.

The proposed GST regime differentiates Crop Protection from seeds, fertilisers, farm equipment, etc. Seeds (exempt), fertilisers (12%), tractors (12%), crop protection products remain taxable at 18%, depriving the industry of equal treatment vis-à-vis other agricultural inputs.

As the farm sector will remain largely exempt from GST, any input taxes suffered on inputs used in the farm sector such as seeds, fertilisers, pesticides, tractors etc, will remain blocked and contribute to increase in prices of farm output. Farm output prices are controlled by market forces and the farmer has little control. As the input price rises and output price remains stagnant, the farmer will have no option but to absorb the cost, thus increasing his burden. Indian farmer is already reeling under tremendous pressure from many ends and the increased burden of taxes will create a crater in his income. If somehow, the output prices increase, the nation will suffer as the food prices will go up, thus creating trouble for the common man. The way out will be that GST rate for crop protection products is reduced from 18% to the lowest slab possible. This will ensure parity across all agricultural inputs and reduce encumbrance on farmers.

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