Implementation of GST defeats the vision of “India as Organic Hub of the World”

New Delhi. As the GST is set to be implemented from 1st July 2017, both the organic farmersand the organic food industry appears apprehensive about this new taxation system, under GST,which is a four to six fold tax increase on some of the critical bio-inputs from 0% – 5% current rates to flat GST rates of 18%. In an online survey done by ICFA over the last two weeks reveals the fear amongst the exporters of organic food that the increased production cost may cost them international market,

 

while farmers are apprehensive about the increased production cost, which they may not be able to recover from the buyers. Equally concerned sounded the producers of bio fertilizers and bio-pesticides, saying that lower GST rates on chemical fertilizers @12% will push farmers to prefer chemical products over bio, defeating the national vision of establishing India as the Organic Hub of the World.

Some farmers responded saying that the stated objectives of the Government are to promote bio and eco agriculture, which reflected in the current Government’s consistent focus on North East, which practices predominantly organic agriculture with Sikkim having been declared as the Complete Organic State, while few others, Mizoram, Nagaland, Meghalaya and Arunachal are on way to achieve total organic production.

Dr. Rajaram Tripathi, National Convener, All India Farmers Alliance pointed out that the BJP Manifesto categorically mentions the thrust to Jaivik Kheti (Organic farming), but going by what the GST rates reveal, there is contradiction.

The total taxes currently are from 0% in nine states to 2.5% – 5% in the rest, making an average of 2%, while the revised GST rates are flat 18% on key biological pesticides and some of bio-fertilisers, including sea weed extract bio-stimulants. This may result into organic farming becoming costlier by about 6 – 10%, given the major cost of organic farming goes to buying bio-inputs.

On account of increasing load of chemicals for agriculture and its harmful effects on human as well as environment health like serious diseases such as cancer, skin allergies,

asthma and other respiratory problems have resulted in scientist to promote the Eco friendly agriculture including Organic farming for safer food, the same has been stressed by the Union Agriculture Ministry in its plan of Paramparagat Kheti Scheme as well as under the National Mission on Sustainable Agriculture.

Hon’ble Prime Minister Modi has spoken in details on several occasions the success of Sikkim Organic Model, and even held a meeting of Agriculture Ministers of all the States in Gangtak in May 2015, said Dr. MJ Khan, Chairman, Indian Council of Food and Agriculture, adding that the GST rates on bio-fertilisers runs contrary to the stated policy of the Government, where on one hand it talks about reducing the load of subsidies on fertilisers from the current size of about Rs. 75,000 crores and on the other hand promoting organic farming.

The experts feel thatthe implementation of GST may negatively affect the same due bio fertilizers being placed in higher tax slab under GST. The new tax slab for bio fertilizers is 18% which under current taxation system are levied with 0% tax in major States.

Thus, promotion and adoption of organic agriculture will face hindrance as farmers will not prefer bio – fertilizers over chemical fertilizers because of their increased cost, which does not fall in line with the thrust area of eco-friendly agriculture of the central government, especially after the success of Sikkim Organic Mission.

Bio fertilizers are key input for organic as well as eco-friendly farming and approximately constitute 20% of the inputs used in the organic agriculture of the total used inputs.

Thus, increase in the taxation of bio – fertilizers will results in the increase in the price of the bio – fertilizers, resulting in the uncompetitive price at the international market.

According to the industry experts, due to the implementation of GST.in 2017, India may loosethe organic produce export by 4 to 6%,which will impact the economy adversely.

Not only the exports, rather domestic market may also turn down by 3% – 4%, valuing toa loss of approximately Rs. 1,000 crores or more over a period of next 2 – 3 years. This may further decline India’s share in 2020 afterwards, when global market expands from its current $80 billion to an estimated $ 100 billion.

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