Ahead of the upcoming Union Budget, a key industry body has put forward a set of crucial demands aimed at streamlining taxation and licensing for the fertilizer sector. The Indian Micro-Fertilizers Manufacturers Association (IMMA) has called on the central government to implement significant reforms to support manufacturers and, by extension, the farming community.
Key Demands for GST Rationalization and Refunds
On Sunday, the association, represented by its president Rahul Mirchandani, outlined its primary requests. A central plea is for the extension of a uniform 5 per cent Goods and Services Tax (GST) rate to all fertilizers listed under the Fertilizer Control Order (FCO). While the industry has welcomed the GST 2.0 reforms, which reduced rates on certain items, it now seeks consistency across the board.
Rahul Mirchandani, who is also the chairman of Aries Agro Limited, argued that a common tax rate would create a level playing field, reduce classification disputes, and encourage product innovation without tax-related distortions. However, manufacturers are currently grappling with a significant operational hurdle: an inverted duty structure.
This occurs when the GST paid on raw materials is higher than the tax levied on the finished fertilizer products. This mismatch leads to an accumulation of excess input tax credit, effectively locking up vital working capital for companies. For sectors like fertilizers, where prices are often controlled, this strain is particularly acute.
Pushing for "One Nation, One License" System
Beyond taxation, IMMA has urged the government to revolutionize the licensing framework. The association is advocating for a 'One Nation, One License' system to simplify the complex and fragmented current process.
Under the existing rules, manufacturers must obtain separate licenses for each state and sometimes even districts, leading to unnecessary delays, increased costs, and bureaucratic hurdles. IMMA proposes the creation of a centralized online database for license documents accessible by all states.
This digital reform would drastically speed up marketing permissions and cut down on paperwork. A streamlined system would not only benefit manufacturers but also ensure that farmers gain faster and better access to quality agricultural inputs.
Implications for Working Capital and Sector Growth
The call for expedited GST credit refunds is directly tied to easing the financial pressure on manufacturers. Mirchandani emphasized that faster refunds would immediately alleviate working capital stress. This freed-up capital could then be redirected toward critical areas such as enhancing product quality, expanding production capacity, and strengthening farmer outreach programs.
The association's pre-budget recommendations highlight a concerted effort to address structural issues within the micro-fertilizer industry. By resolving the inverted duty structure, unifying GST rates, and simplifying licensing, the government can potentially unlock growth, foster innovation, and support the agricultural backbone of the economy.
