Crop care Federation of India (CCFI) has made a formal representation on pre-budget proposals for the agrochemical industry for the year 2022–23 focusing on the theme Atmanirbhar Bharat.

In a communication sent by Nirmala Pathrawal, Executive Director, CCFI to Dr P K Meherda, Joint Secretary (PP, Farmers Welfare & Digital/IT), Ministry of Agriculture, Govt. of India, the Federation has expressed its concern on surging imports from China, Japan, USA and Europe which are killing the Indian manufacturing activities.

The concept of differential duty on intermediates, technical formulations, as adopted by various countries should be implemented to safeguard indigenous industry. There has been a 37% growth in imports from Rs 9096 crore in 2019-20 to Rs 12410 crore in 2020-21 in agrochemicals which is a cause of concern both to the industry and the government.

Among other reasons sighted is the reduction in cost ranging from 50-80% when manufactured indigenously as compared to imported cost of similar pesticide.

Presently, the custom duty on Technical and Formulations is 10% which is a disincentive for any indigenous manufacturer who has huge investment and deployment of labour.

As has been observed, the quality manufactured by indigenous manufactures matches global standards and is being exported to 130 countries with acceptable specifications  

On one side formulations are imported in sizable quantities/value at the cost of foreign exchange outgo and on the other hand, importers make huge profits (up to 200%) from these imported formulations, CCFI claims. Hence, the profits are repatriated to the originating foreign country

CCF mentions that the Indian agrochemical industry has the technical capability and unutilised capacity of ~ 35% in liquids, granules and wettable powders to meet both domestic demand and exports. These exports are made majorly (90%+) by only Indian agrochemical manufacturers.

According to CCFI, of the 280 molecules registered in India only 85 are majorly consumed out of which almost 45 Technicals are manufactured in our country.

Reacting to the pre-budget proposals, Harish Mehta, Senior Advisor, CCFI, said that out of total imports, 53% was the share of ready-made formulations imported (in value) which would go further unless stringent measures are not taken expeditiously.

The industry is of the view that non-essential Imports should be stopped and simultaneously the customs duty on Imports of Technical Grade should be enhanced from present 10% to 20%. Likewise, custom duty on ready-made formulations is enhanced from the present 10% to 30% to safeguard the Indian Industry. Formulation import entails no value addition, or investment or employment, a trend adopted by MNCs and commodity traders who do not have their own manufacturing plants in India.

“The agrochemical industry has reached a turnover of Rs 55,000 cr out of which Rs 30,000 crore is exported to 130 countries with matching quality specifications, which is a matter of pride” Mehta added.

CCFI says that the import lobby’s illogical claims must be overlooked as Indian companies have established world class R&D centers to develop safe and effective new molecules for which faster Registrations would be necessary.

CCFI’s Contention on increase in custom duty

The attached format as sought by you indicates that last year ready-made formulations mainly by MNCs and traders reached a staggering figure of Rs 6925 crore (almost 53% of total imports ) which is  increasing by 35-40% every year.

The industry is of the view that non-essential Imports should be stopped and simultaneously the customs duty on Imports of Technical Grade should be enhanced from present 10% to 20%. Likewise, custom duty on ready-made formulations is enhanced from the present 10% to 30% to safeguard the Indian Industry. Formulation import entails no value addition, or investment or employment, a trend adopted by MNCs and commodity traders who do not have their own manufacturing plants in India.

Present custom duty @10% on both Technical & formulations only encourages imports and gives no incentive for domestic manufacturers as it becomes an uneven playing field. China offers 13-16% cash rebate for exports to India detrimental to Indian manufacturers.  

We are confident that India can become a manufacturing hub and achieve export of Rs 60,000 crores in the next three years in this champion sector with an estimated investment of Rs10,000 crore.

With the increase in custom duty, there would be an increase in government revenue and saving of valuable foreign exchange by curtailment of non-essential imports.