MUMBAI: Agrochemical manufacturers have asked the Central government to exempt pesticides from what is currently one of the highest tax levies in the country, of about 36%.
Citing the need for increased access for farmers to their products, especially pesticides, the industry is looking for relief from total taxes that currently reach 36%. The total levy comprises excise duty, value-added tax, turnover tax, octroi, surcharge and a cess. At 16%, excise duty is the largest single component.
Submitting a pre-Budget memorandum to the finance ministry, the industry stakeholders have pointed out that because of the high tax structure, their products are becoming unaffordable to a great majority of farmers.
Currently, only 25% of the total 14 crore hectare farm area in India is covered with chemical crop protection. With one-third of the cropped area having access to pesticides, annual loss of farm output due to pest attacks is nearly Rs90,000 crore in India, said S. Kumarasami, chairman, Agrochemicals Policy Group (APG), an industrial body representing pesticide companies. “Small and marginal farmers are not able to use pesticides as the prices are high. Though India’s pesticide requirement is valued at Rs16,000 crore, the present consumption is only for Rs4,000 crore,” he added.
Rajju Shroff, chairman, United Phosphorus Ltd, the largest manufacturer of plant-protection chemicals in the country, told Mint, “The industry is already reeling under pressure from high R&D cost and lots of biased negative propaganda by vested interests. So, overburdening the manufacturers with high levies will only help destroy the sector, despite the importance of these products in crop protection.”
“Due to high costs, the pesticide consumption is very low at 480gm per hectare in India as compared with 17,000gm in Taiwan, 10,700gm in Japan and about 4,000gm in the United States and European countries,” he added.
The excise duty on agrochemcials is currently 16%, while other inputs such as fertilizers, seeds, farm equipment and tractors are exempt.
Kumarasami said a price drop from a waiver of excise duty will lead to increased coverage of sown area with pesticides and over the next two to three years the area treated with pesticides would go up from from the current 35 crore hectares to about 55crore hectares. This will generate an additional income of Rs 10,000 crore in the hands of farmers, according to APG estimates. Kumarasami added that such gains would far exceed the loss of tax revenue of Rs160 crore.