Budget 2023: CropLife India urges Govt to bring GST rate cut in agrochemicals to benefit farmers

Budget 2023: CropLife India urges Govt to bring GST rate cut in agrochemicals to benefit farmers
CropLife India urged the Indian government to implement a science-based, progressive and predictive regulatory regime, for the sector to achieve its true potential

CropLife India, an association of 16 R&D-driven crop science companies, suggested that in order to enhance the focus on innovation and research & development, which would benefit the farmers; follow a uniform basic customs duty of 10 per cent for both technical raw material and for formulations; provide 200 per cent weighted deduction on R&D expenses by agrochemical companies and GST on agrochemicals be reduced from the current 18 per cent to 12 per cent.

Durgesh Chandra, Secretary General, CropLife India recommended, “In order to enhance the income of the farmers, agricultural reforms are the need of the hour and Budget 2023-24 will be an imminent step. Formulation import of new for-India single molecules or their different combinations helps the farmers in combating resistance, climate change, new invasive pests and in improving the competitiveness of Indian agricultural produce internationally. Once these new solutions get adopted by the farmers, local manufacturing can commence and support the larger objective of ‘Make in India’. Formulation imports are then converted to the manufacturing formulations and then to manufacturing of the technical in India.”

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“Therefore, the topic of imports needs to be looked at holistically and factually, and not with a narrow perspective so that stakeholders in the service of Indian agriculture are not misguided with motivated claims and narrow perceptions. Keeping in mind the potential of the agrochemical industry, the government has recognized agrochemicals as one of the 12 champion sectors, where India can become a major global manufacturing hub. However, if we have to become a global hub for supplies, Indian regulatory processes must comply with the global regulatory ecosystem. We cannot have a dual policy of stifling formulation imports in India, yet promote export of formulations. We urge the Indian government to implement a science-based, progressive and predictive regulatory regime, for the sector to achieve its true potential,” Chandra added.

CropLife’s recommendations
Issue CropLife India recommendation Justification
Proposal for enhancement of Basic Customs Duty of pesticide formulation from 10 per cent to 30 per cent by some sections of industry. Follow a uniform basic customs duty of 10 per cent for both technical raw materials and for Formulations. (i) If any restriction in formulation import is imposed, India will be deprived of safer and newer formulations for the benefit of Indian farmers

(ii) The increase in basic customs duty from 10 per cent to 30 per cent will have a huge impact on the final pricing and will adversely affect the affordability of the smallholder farmer community in India.

· Also note that most of the inputs for the smallholder farmers in India is zero duty for example seeds. Hence, an increase in the customs duty will impact smallholder farmers and it would be difficult for them to sustain in such a difficult situation.

Farmers are bearing high GST rate on agrochemicals but are unable to seek benefits. · The GST rate on agrochemicals should be lowered to 12 per cent.

· The lower rate would be aligned with other agriculture inputs.

· The lower rate would help in lowering the prices of agrochemicals.

· Farmers do not have any mechanism of claiming the input on taxes being paid by them; yet are susceptible to higher taxation.

· The move will help in doubling farmers’ income as it would enhance their savings.

Simplification of requirement under GST for issuance of credit notes to customers. · The government should allow companies to adjust input credit of one state against the tax payable situation in another state as GST is a Central levy.

 

· In case of discontinuation of business due to reasons which are not business specific and is due to change in government regulations, the government should allow the company to claim a refund of Input Credit.

Currently it is very stringent. The law  states  –

(i)  There has to be a pre-agreement before the supply is made

(ii) Supplier has to ensure input credit is reversed by customer. These two conditions make the issuance of credit note along with GST a very difficult process. As a result of this some of the customers are facing an inverted duty structure.

In order to achieve ‘Atmanirbhar Bharat’, the government should boost Research and Development (R&D). · The government ought to provide a 200 per cent weighted deduction on R&D expenses by pesticide companies.

· The government may consider providing this to those units that have minimum fixed assets of INR 50 crores and incurring expenses of INR 10 crores.

(i) Promote local innovation

(ii) ‘Make in India’

(iii) Provide new technology to farmers

Local procurement and maintenance cost of drones, its batteries and components Request for 50 per cent subsidy on local procurement and maintenance cost of drones, its batteries and components. This will help in the growth of the domestic drone sector and usher in faster uptake of this new and revolutionary technology.
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