CropLife India, an association of 17 R&D driven crop science companies, has proposed key measures to enhance the focus on innovation and research & development, which will enable farmers to access newer and greener crop protection products. These recommendations include:
-
Providing a 200% weighted deduction on R&D expenses for agrochemical companies.
-
Maintaining a uniform basic customs duty of 10% for both technical raw materials and formulations.
-
Reducing GST on agrochemicals from the current 18% to 12%.
-
Allocating funds in the Budget to strengthen the Extension Mechanism, ensuring better outreach and support for farmers.
-
These steps would foster growth in the sector, benefiting farmers and contributing to sustainable agricultural practices; which is an urgent need. The Budget should allocate funds to strengthen the extension mechanism and actively invite collaboration from the private sector; which will enhance the reach and effectiveness of various initiatives.
Ankur Aggarwal, Chairman - CropLife India and Managing Director of Crystal Crop Protection Ltd., opines, "The Budget 2025-26 should focus on reforms aimed at increasing the farmers' income through increasing the productivity and fostering the inclusive and sustainable growth of the agriculture sector. Newer and greener crop protection products are required to tackle the emerging challenges. The availability of new formulations through import —whether single molecules or their combinations—plays a crucial role in helping farmers to address the resistance developing in pests and impacts of climate change, and enhance the global competitiveness of Indian agricultural produce. As these innovative solutions are adopted by farmers, local manufacturing begins, further supporting the 'Make in India' initiative. What starts as formulation imports eventually transitions to domestic manufacturing, first of the formulations and then of the technical products in India”.
Aggarwal added, “We request the Indian Government to create an ecosystem around the science-based, progressive, and predictive regulatory framework that will allow the sector to become globally competitive and reach its full potential. It is crucial that we move away from a dual policy approach that restricts formulation imports in India while simultaneously promoting formulation exports.”
Our rationale –
|
Issue |
CropLife Suggestion |
Justification |
|
To achieve the vision of 'Atmanirbhar Bharat,' the Government must prioritize and boost investment in Research and Development (R&D). |
· The Government should provide a 200% weighted deduction on R&D expenses for crop protection companies. · The Government may consider extending this benefit to units with a minimum fixed asset value of INR 50 Crores and annual R&D expenses of INR 10 Crores. |
o Promote local innovation o ‘Make in India’ o Provide new technology to farmers |
|
Basic Custom Duty. |
· Follow a uniform basic customs duty of 10% for both Technical raw material and for Formulations. |
(i) Imposing restrictions on formulation imports would deprive India of safer and newer formulations, ultimately hindering the benefits to Indian farmers. (ii) Increasing the basic customs duty from 10% to 30% would significantly impact the final pricing, making crop protection products less affordable for the smallholder farmer community in India. (iii) Please note that most inputs for smallholder farmers in India, such as seeds, are currently zero-duty. Therefore, any increase in customs duty would significantly impact these farmers, making it even more difficult for them to sustain their livelihoods in such challenging conditions. |
|
Farmers are shouldering the burden of high GST rates on agrochemicals, yet they are unable to benefit from this taxation structure. |
· The GST rate on agro-chemicals should be lowered to 12%. · The lower rate would be aligned with other agriculture inputs. · The lower rate would help in lowering the prices of the 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. |
|
There is a need for the simplification of GST requirements for the issuance of credit notes to customers. |
· The Government should allow companies to adjust input credit from one state against the tax payable in another state, as GST is a central levy.
· In cases where a business is discontinued due to reasons beyond the company’s control, such as changes in Government regulations, the Government should permit 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 the 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. |
The Budget 2022-23 marked a significant step with the inclusion of "Kisan Drones" for agrochemical spraying, crop assessment, and digitization of land records. ‘Kisan Drones’ have rapidly become an invaluable tool for Indian farmers and the establishment of digital public infrastructure will further enhance Indian agriculture, while also providing a boost to the digital ecosystem for agriculture.
As we look ahead to Budget 2025-26, it is crucial that the focus shifts towards the crop protection industry. CropLife India and its members urge the Government to consider the following measures:
-
Provide a 200% weighted deduction on R&D expenses for pesticide companies.
-
Retain a uniform basic customs duty of 10% for both technical raw materials and formulations.
-
Reduce the GST on agrochemicals from the current 18% to 12%.
-
Allocate Funds in Budget to Strengthen the Extension Mechanism
These measures would directly benefit farmers by reducing costs and increasing access to innovative, sustainable crop protection products. By fostering local innovation and improving the affordability of agrochemicals, these steps would not only empower farmers but also enhance the agricultural sector as a whole, promoting higher productivity and supporting long-term growth in Indian agriculture.
