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Budget 2023-24: CropLife India Urges Govt. to Reduce High GST Rates on Agrochemicals

CropLife India urged the Indian government to implement a science-based, progressive and predictive regulatory regime, for the sector to achieve its true potential.

Shruti Kandwal
To increase the income of the farmers, agriculture reforms are necessary at this time, and Budget 2023–24 would be an impending step.
To increase the income of the farmers, agriculture reforms are necessary at this time, and Budget 2023–24 would be an impending step.

Budget 2023: In order to increase the emphasis on Innovation and Research & Development, which would help the farmer, CropLife India, an organization of 16 R&D-driven crop science companies, recommended the government: follow a uniform basic customs tariff of 10% for both technical raw materials and formulations; provide a 200% weighted deduction for R&D expenses involved by agrochemical industries, and lower the GST on agrochemicals from 18% to 12%.

According to Durgesh Chandra, Secretary General of CropLife India, "To increase the income of the farmers, agriculture reforms are necessary at this time, and Budget 2023–24 would be an impending step. The farmers are helped in their attempts to fight resistance, climate change, and new invading pests, and to increase the competitiveness of Indian farm commodities overseas by the formulation import of new for India single molecules or their various combinations. Local manufacturing can start once the farmers begin utilizing these innovative solutions, advancing the overall goal of "Make in India. Imports of formulations are subsequently transformed into formulation production and technical manufacturing in India.”

Therefore, Chandra continued, "The problem of imports has to be examined comprehensively and factually, and not from a restricted viewpoint, in order to prevent stakeholders working on behalf of Indian Agriculture from being misled by motivated claims and limited views. The government has designated agrochemicals as one of the 12 Champion Sectors, where India can develop into a significant global manufacturing center, keeping in mind the potential of the agrochemical sector. However, Indian regulatory systems must comply with the global regulatory ecology if we are to become a center for supply on a worldwide scale. We cannot pursue a dual strategy of encouraging formulation exports while restricting formulation imports into India.”

Budget 2023: CropLife’s Recommendations

Issue: Proposal for enhancement of Basic Customs Duty of pesticide formulation from 10 percent to 30 percent by some sections of industry.

CropLife India recommendation: Apply a standard 10% basic customs duty to both technical raw materials and formulations.

Issue: Farmers are bearing high GST rates on agrochemicals but are unable to seek benefits.

CropLife India recommendation:

  • Agrochemicals should only be subject to a GST rate of 12%.

  • The less expensive rate would be comparable to other agricultural inputs.

  • The decreased rate would contribute to a lower agrochemical rate.

Issue: Simplification of the GST's credit note requirements for clients.

CropLife India recommendation:

  • Given that GST is a Central levy, the government should let businesses reconcile input credits from one state against the tax payable situations in other states.

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

Issue: The government has to increase Research and Development (R&D) in order to achieve "Atmanirbhar Bharat".

CropLife India recommendation:

  • The government should allow pesticide companies to deduct their R&D costs at a weighted rate of 200 percent.

  • The government can think about giving this to units with a minimum of INR 50 crore in fixed assets and INR 10 crore in costs.

Issue: Local procurement and maintenance cost of drones, their batteries, and components.

CropLife India recommendation: Request for a 50% subsidy on the local cost of purchasing and maintaining drones, their batteries, and other parts.

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