The PAI in a memorandum to the Union finance ministry has pointed out the discrimination made out to the pesticides industry. It stated that while all other agri inputs like seeds, fertilisers, micronutrients, agriculture implements and sprays continues to be exempted from excise duty, there is no logic in imposing a high excise duty on pesticides which is also a necessary agri input. In fact pesticides use act as an instrument of crop insurance cover for farmers by protecting his crops from pests and diseases.

The government in past had realised the utility of pesticides for farmers and had exempted all pesticides from excise duty for about 10 years till 1994. After excise duty was levied on pesticides from 1995 onwards, certain controversies arose on the applicable rates of excise on pesticide formulations and technical grade pesticides in the Budget of 1996-97.

The government chose to treat technical grade pesticides as chemicals and imposed very heavy excise on them, defeating the purpose of lower rates of excise on the formulations. A higher excise rate at same point in the manufacturing chain, without corresponding set-offs had burdened both the industry and the farmers. In the last Budget, the government imposed 16 per cent excise duty on all pesticides.

The memorandum further stated that this high excise duty on pesticides has resulted in largescale manufacture and sale of spurious pesticides, adversely affecting the farmers. It is estimated that the spurious pesticides sector today does 15 per cent of the business worth Rs 500 crore.

It is growing at the rate of 25 per cent per annum, unchecked and unhindered. The use of spurious pesticides has been the cause of farmers' plight.

The quality of pesticides manufactured by legally recognised units are good and recognised world over. The exports of pesticides including intermediates have touched Rs 1,500 crore in 1999-2000 from the level of meagre Rs 64 crore in 1988-99.