The implementation of the goods and service tax (GST) may have an adverse impact on organic produce, according to exporters and industry views cited in an online survey by the Indian Council of Food and Agriculture (ICFA).

The current tax rates of 0-5 per cent on bio-inputs are set to rise to a flat GST rate of 18 per cent.

As a result, exporters of organic food are worried that the higher production cost may hit their international prospects.

Farmers, too, are apprehensive about the higher production cost, which they may not be able to recover from buyers, ICFA said in a release.

Price rise



Bio-fertilisers, which constitute 20 per cent of the inputs used in organic agriculture, will see an increase in prices due to a rise in the tax rate, leading to uncompetitive prices in the international market.

India may see exports of organic produce drop by 4-6 per cent and even the domestic market may be down by 3-4 per cent, the release said.

Producers of bio-fertilisers and bio-pesticides, too, said the lower GST rates on chemical fertilisers, at 12 per cent, would push farmers to prefer chemical products, defeating the national vision of establishing India as the “organic hub of the world”.

Higher input costs



“GST rates are flat 18 per cent on key biological pesticides and some bio-fertilisers, including seaweed extract bio-stimulants. This may result in organic farming becoming costlier by about 6–10 per cent, given that the major cost of organic farming is incurred in buying bio-inputs,” said Rajaram Tripathi, national convener of the All India Farmers Alliance.

He said this was in contradiction to the BJP manifesto, which categorically mentions the thrust to jaivik kheti (organic farming).