Levy of Customs tariff be raised to 30% on Readymade Pesticide Imports to Save India’s Agrochemical Industry
- Currently 10% customs duty is leviedon both import of technical grade products and finished pesticide formulations.
- Before 1991, a customs duty of 40 percent was levied on intermediates and raw material and technical grade pesticides used for manufacturing of formulations.
- In 2007, import duties on technical grade pesticide and finished formulation were brought at par.
- Indian Pesticide Industry is valued at Rs. 43,000 crores, including exports worth Rs.23,000 crores pesticides and domestic consumption worth Rs.20,000 crores, and is the 4thlargest in the world.
The Pesticides Manufacturers & Formulators Association of India (PMFAI) notes that the current customs duty structure, levying an equal amount on the import of technical grade pesticides and finished pesticide formulations can potentially wipe out the pesticide industry in India and must be increased to 30 percent on imports of finished pesticides formulations from the current 10 percent for the success of ‘Atmanirbhar Bharat’. It also notes that custom duty on imports of technical grade products should be hiked to 20 percent.
Before the economic liberalization in 1991, the government levied a customs duty of 40 percent on intermediates and raw material and technical grade pesticides used for manufacturing of formulations. This led to faster development of the Indian agrochemical industry as many large, medium, and small-scale industries manufacturing technical grade pesticides and pesticide formulations in the country were set up. Since liberalisation, customs duty on pesticide was reduced from time to time and in 2007, import duties on technical grade pesticide and finished formulation were brought at par.
“There are a lot of anomalies in the current customs duty regime that favours the imports of pesticides rather than manufacturing in India. This gives an unfair advantage to MNCs and importers and defeats the vision of ‘Atmanirbhar Bharat’. Same customs duty for import of technical grade products and finished pesticide formulation products promote imports of finished goods and is a death knell to the Indian agrochemical manufacturing industry, which is the 4thlargest global producer of agrochemicals or pesticides after the US, Japan, and China. The government must amend the current structure of customs duty and increase them to 30 percent and 20 percent for imports of finished pesticide formulations and technical grade products, respectively,” says Mr. Pradip Dave, President, PMFAI.
PMFAI, an industry body comprising more than 200 small, medium, and large-scale Indian pesticide manufacturers, formulators, and traders, also note that the current structure of customs duty can wipe out the Rs. 43,000 crore industry and may leave Indian farmers at the mercy of the importers and MNCs.
“Indian Pesticide Industry size at present isRs.43, 000 crores including exports worth Rs.23,000 crores pesticides and domestic consumption worth Rs.20,000 crores. The low customs duty favour importing from overseas countries and especially from China that worked out as easier and cheaper. But it has caused a downward trend in the manufacturing sector in India with no new plants being set up recently. Besides, investments in industries manufacturing key intermediates and raw material have dropped, leading to dependence on imports of Manufacturing Use Products (MUPs) such as intermediates and raw material. Unless we urgently reverse the setback, particularly to the MSMEs, it will harm the industry and the farmers – the MNCs and companies associated with them, who import ready-to-use pesticide formulations to the country without registering technical grade products here, sell them to farmers at a profit margin ranging from 100 to 200 percent. The customs duty on imports of technical grade pesticides (active ingredients) must be increased to encourage and support its indigenous production,” says Mr. Dave.