Agricultural pump-sets manufactured by the organised sector are losing out to “kit” (unbranded) pumps made in the unorganised sector because of 18% GST being levied on them for the last three years, say manufacturers in Coimbatore.
According to the president of the Indian Pump Manufacturers Association, sale of “kit” pumps reduced to less than 10 % of the total agriculture pump-set sales after the introduction of 12% GST. However, following the hike in GST to 18% in October 2021, share of “kit” pump sales rose to almost 30% of the agriculture pump-sets sold as cost of the pump-sets surged by six percentage points and farmers were unable to spend more.
Since some of the pump-set manufacturers had problems related to refund of input tax credit, the rate was increased to 18% from 12%.
He said manufacturers of “kit” pumps buy the components in the morning, assemble, and sell the pumps by evening and do not pay any tax. In several States, free power is supplied to agriculture connections and hence, farmers do not look for energy efficient pumpsets.
The president of the Southern India Engineering Manufacturers’ Association, added that manufacturers of branded pumpsets are hit badly for the last two years because of the hike in the GST rates. The gap in cost of branded pumpsets and unbranded ones has widened leading to almost tripling in sale of the unbranded pumspets across the country, he said.
Source from: https://www.thehindu.com/business/higher-gst-hits-sale-of-branded-agriculture-pumpsets/article69188812.ece
