New regime will be incentive for farm mechanisation

NEW DELHI: The GST rate rejig comes not just as a reduction in taxes on various components of the farm sector, but also as a nudge to reforms in sustainable farming, fisheries and dairy which may ultimately benefit marginal and small farmers.The sector will see reduction in GST from 12%-18% to 5% on drip irrigation systems, sprinklers, agricultural machinery, specified bio- pesticides, micro nutrients, fish oil, fish extract, composting machines (vital for producing organic manures and ensuring eco-friendly pond management), preserved fish and shrimp products; reduction from 18% to 5% on key fertiliser inputs (sulphuric acid, nitric acid, and ammonia); and either full exemption or reduction of tax to 5% on different milk or milk products.Analysis shows this will reduce input cost at farm level and drive sustainable growth, encouraging farmers to opt for drip irrigation systems and sprinklers. It will attract investments, specifically in manufacturing of farm machinery such as tractors, irrigation systems and composting equipment.Since the GST on bio-pesticides has also been reduced, it will encourage farmers to shift toward safer options, contributing to the improvement of soil health and increase in output.

This along with a reform-based push for efficient and judicious use of water for irrigation through drips and sprinklers will go a long way towards sustainable farming.Similarly, significant tax rate rationalisation in the fisheries sector will help in reduction of operational costs, enhance competitiveness in domestic and export markets, and directly benefit millions of fish farmers and other stakeholders.The revised GST structure on shrimp products will soften the blow shrimp farmers and exporters received from the enhanced US tariff. The dairy sector too saw a significant change. Ultra-High Temperature milk and paneer/chhena (pre-packaged and labelled) will have zero tax while the rest of milk products, including icecreams, cheese, ghee, dairy spreads and condensed milk, will now attract 5% GST.