FNB News – New GST rates: A boon for agriculture and farmers’ prosperity

The impact of the GST reforms will be widely seen among small and medium farmers. Lower GST on agricultural machinery and solar-powered equipment will reduce farming costs and increase farmers’ profits. GST has been reduced on bio-pesticides and micronutrients, which will benefit farmers and encourage a shift from chemical to bio-fertilisers. In the dairy sector, milk and cheese will now attract zero GST, benefitting not only common citizens but also farmers, livestock owners, and dairy producers. The GST reforms will also promote integrated farming. Clear benefits will be visible in animal husbandry, beekeeping, fisheries, agroforestry, and poultry farming. Reduced GST on tendu leaves will strengthen the livelihood of tribal communities, while lower GST on commercial goods vehicles will make the transportation of farm produce cheaper.

Agricultural Mechanisation

• GST on tractors (<1800 cc) reduced to 5%.
• Tractor parts, including tyres, tubes, hydraulic pumps: GST cut from 18% to 5%.
• Sprinklers, drip irrigation, harvesting machinery, tractor parts: GST cut from 12% to 5%.
• Fixed speed diesel engines (>15 HP), threshing/harvesting machines, compost machines: GST cut from 12% to 5%.
• Lower tractor prices will make mechanisation accessible to small and medium farmers, saving time, reducing labour costs, and improving productivity.

Fertilisers

• Ammonia, sulfuric acid, nitric acid: GST reduced from 18% to 5%.
• Reduction in rates will correct the inverted duty structure for fertiliser production.

 Bio-Pesticides and Micronutrients

• 12 bio-pesticides and several micronutrients: GST cut from 12% to 5%.
• Bio-based inputs made more affordable, promoting eco-friendly and sustainable agriculture.
• Encourage farmers to shift from chemical pesticides to bio-pesticides, improving soil health and crop quality.
• Direct benefit to small organic farmers and FPOs under the government’s National Mission on Natural Farming.

Fruits, Vegetables and Food Processing

• Prepared/preserved vegetables, fruits, nuts: GST reduced from 12% to 5%.
• Boost to cold storage, food processing, and value addition.
• Reduction in wastage of perishables, ensuring farmers get better prices.
• Promoting export of processed food, strengthening India’s position as an agri-export hub.

 Dairy Sector

• No GST on milk and cheese.
• GST on butter, ghee, etc., cut from 12% to 5%.
• Dairy farmers’ products made more competitive
• Milk cans (iron/steel/aluminium) now at 5% instead of 12%.
• Boost to indigenous dairy products.

 Aquaculture

• GST on ‘prepared or preserved fish’ reduced from 12% to 5%.
• Likely to encourage aquaculture and fish farming nationwide.

 Honey

• GST reduced on natural honey, benefitting beekeepers, tribal communities, and rural SHGs.
• GST on artificial honey (whether blended with natural or not) cut from 18% to 5%.

Solar-Powered Equipment

• GST on solar-powered devices reduced from 12% to 5%.
• Affordable solar equipment will lower irrigation costs, helping farmers.

Tendu Leaves

• GST reduced from 18% to 5%.
• As tendu leaves are a key source of income for farmers and tribals in Odisha, Madhya Pradesh, and Chhattisgarh, this cut will strengthen livelihoods in these states.

On the whole, the GST rationalisation in agriculture is a farmer-friendly, pro-rural, and pro-sustainability reform — lowering costs for farmers, boosting cooperatives and FPOs, and strengthening food security. The boost in agriculture will happen at a multi-layered level and also to all its allied activities. The farm productivity will increase thanks to reduced fertiliser costs, the cold storage and Agri-processing will gain, and mechanisation will increase in farming. In addition to all this, aqua culture, dairy farming and co-operatives involved in the same will become more profitable. The follow-on effect of the above will make us more competitive against imported food products and packaged foods. Our domestic food production would be more competitive compared to imports of food items, in order to become Atmanirbhar.