Union agriculture minister Shivraj Singh Chouhan on Friday urged the farm equipment makers to pass on the entire benefit of Goods and Service Tax cuts to farmers, effective September 22.
The tax reliefs are expected to reduce the prices of tractors and other machinery by 7–13%, according to an official estimate.
The items which will see GST cuts include tractors, paddy transplanters, combine harvesters and threshers.
Lower prices and reduced costs for farmers
Chavan also urged these equipment manufacturers to minimise the role of middlemen and ensure that farmers directly received benefits of GST revisions. The purpose of the exercise is to boost farm mechanisation and reduction in inputs costs, he said.
After meeting several equipment markers including tractors and mechanisation association, all-India agricultural machinery manufacturers’ association and power tiller association of India, Chouhan said while price of tractors of various capacities will drop by Rs 11,875 to Rs 63,000 per unit while in the other equipments, drop in prices because of GST revision to 5% from 12%, would be significant.
Boosting mechanization through affordability
“The GST reduction would make farm machinery at custom hiring centres (CHC) across the country cheaper, and rentals should also come down correspondingly,” Chouhan said.
Currently there are around 30,000 CHCs under the sub-mission on agricultural mechanization (SMAM), which provide farm machinery and equipment on a rental basis at subsidised rates to small and marginal farmers who cannot afford to own expensive machinery individually.
Under SMAM, for making farm machinery more accessible and affordable to farmers, financial assistance @ 40-50% of the cost of machinery, depending on the category of farmers is provided for purchase of agricultural machines.
“Farm machinery like tractors is required to increase production and also helps reduce the cost of cultivation,” Chouhan said. He also stated that for boosting farmers income it is not only necessary to boost crop production but alos reduce the cost of cultivation.
The GST reduction is expected to lower the initial investment required for purchasing farm machinery, which would boost mechanisation of agriculture. An official said the lower GST on tractor parts and tyres will reduce maintenance costs, further easing the financial burden on farmers.
According to an estimate by Indian Council for Agricultural Research, the operation-wise average mechanization levels across crops are 70% for seed-bed preparation, 40% for activities including sowing,planting and transplanting, 33% for weeding and inter-culture, and 34% for harvesting and threshing, resulting in an overall average mechanization level of 45%.