India Lowers GST on Key Farm Inputs; Industry Leaders Call It a Boost for Farmers

06 September 2025, New Delhi: The Goods and Services Tax (GST) Council has announced sweeping reforms for the agriculture sector, marking a decisive step toward reducing input costs for farmers, correcting anomalies, and strengthening India’s rural economy. The revised structure lowers GST across a wide spectrum of farm machinery and inputs, creating a ripple effect that is expected to benefit both cultivators and the wider agri-value chain.

According to the reforms, GST on tractors has been reduced from 12 percent to 5 percent, while tractor tyres and parts that earlier attracted 18 percent will now be taxed at only 5 percent. Drip irrigation systems and sprinklers, which are critical for water conservation, have also seen a cut from 12 percent to 5 percent, along with all major machines used in soil preparation, cultivation, harvesting, and threshing.

The government has extended the benefit to agri-drones and plant growth regulators like gibberellic acid, bringing them under the same lower slab. Fertiliser raw materials such as sulphuric acid, nitric acid, and ammonia, which previously attracted 18 percent, will now be taxed at 5 percent, a move that corrects the inverted duty structure in fertiliser manufacturing. In addition, the GST on micronutrients has been lowered from 12 percent to 5 percent, while a wide range of bio-pesticides and biological crop protection products including Trichoderma, Pseudomonas fluorescens, Bacillus species, Beauveria bassiana, NPV formulations, neem-based products, and Cymbopogon extracts have also been shifted to the lower bracket.

Industry associations and corporate leaders have strongly welcomed the reforms. The Federation of Seed Industry of India (FSII) described the decision as a “game-changer” for Indian agriculture. Ajai Rana, Chairman of FSII and CEO & MD of Savannah Seeds, said the reduction in GST on key inputs such as fertiliser raw materials, bio-pesticides, micronutrients, and machinery would directly empower farmers, ease household budgets, and stimulate rural demand. He added that the move will have a spiralling effect on the economy by boosting consumption, investment, and growth. At the same time, FSII highlighted the need to address pending GST anomalies in the seed sector, where the exemption on seeds as a final product denies manufacturers the benefit of input tax credit on critical services like packaging, logistics, warehousing, and chemical seed treatments.

The Indian Vegetable Oil Producers’ Association (IVPA) also hailed the reforms, noting that they come at a critical time when global uncertainties threaten to slow India’s growth. IVPA welcomed the government’s focus on rationalisation and ease of doing business, while reiterating its call for resolution of the inverted duty structure in edible oils and refund of accumulated tax credits to support the domestic industry and MSME ecosystem.

Rajesh Aggarwal, Managing Director of Insecticides India Ltd., emphasised that reducing GST to 5 percent on mechanisation tools such as tractors, tyres, drip irrigation systems, and agricultural machinery, along with nutrients and bio-based products, would ease the cost burden on farmers and make sustainable solutions more accessible. According to him, these changes would allow farmers to invest more confidently in crop protection and productivity-enhancing practices, thereby strengthening the entire agricultural value chain.

Echoing this sentiment, Dr. R.G. Agarwal, Chairman Emeritus of Dhanuka Agritech Limited, pointed out that cutting GST on agri-drones, gibberellic acid, and bio-pesticides such as Trichoderma, Pseudomonas fluorescens, and neem-based products would accelerate the adoption of eco-friendly crop protection methods and improve soil health. He also welcomed the reduction of GST on fertiliser raw materials from 18 percent to 5 percent, stressing that it would enhance the viability of fertiliser production and ensure timely nutrient supply to farmers. Dr. Agarwal, however, noted that further rationalisation is needed in certain advanced crop protection chemistries that continue to attract higher taxes.

Narinder Mittal, President and Managing Director of CNH India, underlined the impact of GST reduction on farm equipment, related components, and tyres. He said the reforms would accelerate mechanisation by making tractors, harvesters, balers, and implements more affordable, thereby reducing operating costs for farmers and helping address labour shortages. Mittal added that the move comes at a timely juncture before the harvest season, enabling more farmers to adopt baling solutions and reduce crop residue burning, a practice that has severe environmental consequences.

Overall, the reforms are being viewed as a transformative step that not only lowers costs but also promotes mechanisation, sustainable farming, and competitiveness in Indian agriculture. Industry leaders agree that these measures will empower farmers with better returns, support the adoption of modern technologies, and contribute to India’s broader economic growth.

Also Read: India Slashes GST on Tractors and Agri-Inputs to Boost Farm Economy

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