Tractor Industry Could See GST Relief on Components, As Per Parliament Standing Committee on Agriculture

The Fifty-Eighth Report of the Standing Committee on Agriculture, Animal Husbandry, and Food Processing focuses on enhancing "Research and Development in Farm Mechanization for Small and Marginal Farmers" in India.

The report presents crucial recommendations aimed at supporting small and marginal farmers who own less than 2 hectares of land. Tractors, being the backbone of Indian agriculture, play a crucial role in various farm operations, but their high prices remain a significant challenge for many farmers, even with available subsidies.

The Committee proposes the implementation of single standards for farm equipment and attachments overseen by the Bureau of Indian Standards (BIS) to address this issue. All manufacturers would ensure compatibility, matching, and interchangeability in the production of farm implements by adhering to BIS specifications. This standardization would streamline the availability and use of farm machinery, benefitting farmers with cost-effective solutions.

The report emphasizes the urgent need to promote agricultural mechanization and enhance the quality and value of farm produce. To achieve this, the government is urged to prioritize the development of small equipment specifically designed for small and marginal farmers. Such measures aim to make agriculture more attractive and profitable, allowing farmers to cultivate second and subsequent crops, thus increasing their income.

The Committee also highlights the tax implications on farm equipment and proposes a reduction in the Goods and Services Tax (GST) levied on tractor parts and components for tractors up to 40 HP. The current GST rate of 12 percent could be minimized "suitably" to relieve the financial burden on farmers, making mechanization more affordable.

Furthermore, the Committee raises concerns about the lack of a formal study assessing the state of farm mechanization in the country. The Indian Council of Agricultural Research (ICAR) has submitted a proposal to the Department of Agriculture and Farmers Welfare (DOA&FW) on this matter. The Committee strongly recommends that the Department thoroughly examine ICAR's proposal, which includes identifying mechanization gaps on a state-wise basis using real-time data. This approach would help create an effective plan to benefit small and marginal farmers.

The report also acknowledges the potency of the Direct Benefit Transfer (DBT) portal as a single-window clearance system for equipment procurement by individual farmers. However, it suggests streamlining the clearance process for electronic agricultural equipment by involving the Department of Electronics in a unified procedure, ensuring smoother access to machinery for farmers.

To ensure the accessibility of agricultural machinery and expertise at the grassroots level, the Committee proposes the establishment of a Directorate of Agricultural Engineering in each state, similar to the existing ones in Madhya Pradesh and Tamil Nadu. These directorates would facilitate demonstrations, training, repairs, maintenance, and guidance for farmers at the block and district levels, enabling farmers to make informed decisions and use machinery efficiently.

Overall, the recommendations put forth by the Standing Committee aim to boost farm mechanization, reduce financial burdens on small and marginal farmers, and improve the efficiency and productivity of Indian agriculture. Implementation of these measures is expected to make farming practices more sustainable, leading to increased income and prosperity for farmers across the nation.