Among various issues of the Indian agrochemical industry, the Crop Care Federation of India (CCFI) has raised concerns about imports of agrochemicals in India.
The industry body is seeking the Central Government’s intervention for the incorporation of increased customs duty on technical and formulation imports in the Budget 2023-24.
In a communication sent last week to Mr. Sanjay Malhotra, Secretary, Department of Revenue, Ministry of Finance, the association reiterated the concern about the surge in imports and requested corrective measures.
Mr. Harish Mehta, Senior Advisor at Crop Care Federation of India (CCFI) told Krishak Jagat, “The very concept of building a competitive economic system for the domestic industry has been hampered. There has been a 37% surge in agrochemical imports of ready-made formulations mainly by importers reaching the figure of Rs. 12,418 crores in 2020-21 from Rs. 9,096 crores in 2019-20. For the year 2021-22 the imports are to the tune of Rs. 13,365 crores as per Ministry of Commerce.”
As per CCFI, the quality of agrochemicals manufactured by indigenous manufacturers matches global standards and is being already exported to 130 countries. To push the domestic sector to the next level, the industry body has recommended four areas of improvement to the government.
Increase in Customs Duty
CCFI has suggested that non-essential imports should be stopped and simultaneously the customs duty on imports of the technical grade should be enhanced from the present 10% to 20%.
Likewise, custom duty on ready-made formulations must be enhanced from the present 10% to 30% to safeguard the Indian Industry. The government agrees that there has been a delta in the customs duty structure.
Mandatory registration of Technical before import of ready-made formulation
This has been one of the major pain points of the indigenous agrochemical industry as importers and traders, clandestinely import ready-made formulations which impact local manufacturers. This needs to be stopped as Indian manufacturers have the technical capability and capacity to meet the requirement.
Not to reduce GST rates on Agrochemicals
The current rate of GST on agrochemicals is at 18% and majorly covers all the goods and services procured by the industry and thereafter the product sold by the industry across the value chain are at 18%. This is in line to provide a balance and seamless flow of credit and its utilization. It also avoids the distortion caused due to inverted duty structure. This rate covers more than 90% of the goods and services which are subject to GST in the sector.
“Any reduction or exemption would result in loss of revenue estimated at Rs. 4,500 crores annually to the government, besides blocking of working capital which would increase the cost of business”, mentioned Mr. Mehta.
Inclusion of the Agrochemical sector in the PLI Scheme
CCFI has already submitted its proposal to the Secretary of Chemicals, Department of Chemicals & Petrochemicals for inclusion under the PLI Scheme. This will push India to emerge as a manufacturing hub and gain leadership.
The industry body expects an investment of Rs. 12,000 crores in the next 3 years after its implementation.
“A corpus of Rs. 500 crores should be provided by the government to follow the policy of Make in India and Atmanirbhar Bharat for which Indian manufacturers are committed”, said Mr. Mehta. The industry body is hoping that the corrective measures will be incorporated by the government and this will provide a substantial push to the domestic manufacturers to prepare for further investments.
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