Pesticide firms seek VAT, excise waiver

Written by Charanjit Ahuja | Chandigarh | Updated: May 22 2009, 04:28am hrs
Pesticides manufacturers have demanded tax sops and subsidies to make this industry viable which in turn has the potential to save annual crop losses of over Rs 10,000 crore.

Former president of Haryana pesticides manufactures and formulators association, N.K.Aggarwal told FE: The association was pinning high hopes on the new government at the Centre as it was giving subsidy of over Rs 1 lakh crore on fertilizers to farmers. Just 20% of this subsidy needs to be diverted towards pesticides and the manufactures would ensure that crop loss of 25-30% due to various crop diseases becomes a matter of past.

Aggarwal who has two pesticides units at Jammu and Kashmir and Haryana under the name of Crystal Pesticides demanded complete waiver in value added tax and exemption in excise duty. He informed that states like Punjab and Haryana do not impose any VAT on pesticides while it was four per cent in Himachal Pradesh, Uttaranchal and Uttar Pradesh. Similarly if excise duty on pesticides was abolished, the government would lose about Rs 150 crore, but pesticides industry would nevertheless gain an additional turnover of Rs 2,000 crore and farmers Rs 10,000 crore by way of saving crops from the vagaries of pests.

Industry sources say about 30% of the crop area is under the pesticides protection today and a reduction in Excise Duty lead to an additional coverage of 14%, taking the total to 44%. Punjab stands at number four slot in per capita use of pesticides after Andhra Pradesh, Maharashtra and Gujarat. The pesticides manufacturers and formulators association of India (PMFAI) is planning to submit a memorandum to the Prime Minister in this regard shortly.

Pesticides manfuactuers opine that the use of pesticides help to reduce the crop losses, provide economic benefits to farmers, reduce soil erosion and help in ensuring food safety and security for the nation. The pesticide industry with 85,000 mt of production is ranked second in Asia after China and twelfth globally.