Manufacturers of pump sets for agricultural applications have reiterated their demand for reduction of GST on these products to 12% from the existing 18%.
The government increased the GST to 18% about three years ago mainly because the manufacturers supplying to Original Equipment Manufacturers (OEMs) had problems in getting input tax credit. However, with 18% on agri pumps, farmers prefer to buy unbranded pumps that are sold without GST. This has brought down sale of branded and energy efficient pumps tremendously. The manufacturers are able to take 11.5% to 13% input credit. The rest is passed on to farmers. By reducing the GST to 12% the farmers will get substantial cost advantage, the President of the Southern India Engineering Manufacturers Association said.
Higher GST ‘hits’ sale of branded agriculture pumpsets
“This is a demand that we have placed before the government multiple times. The government has also assured to look into it because with the GST rate at 18%, many farmers are buying spurious pumps that are not energy efficient. Several States supply free power to farmers and the increasing use of unbranded pumps pushes up energy consumption. We are hopeful of a reduction in the GST soon,” president of the Indian Pump Manufacturers Association he added.
The market size for agricultural pumps in India is almost $1 billion. If the GST is reduced to 12%, demand from farmers will go up and revive the branded agriculture pump set sector, said a manufacturer in Coimbatore.
Source from: https://www.thehindu.com/business/pumpset-makers-seek-cut-in-gst-on-agri-pumps/article69831952.ece
