Warehousing service provider National Bulk Handling Corporation (NBHC) has said that the fumigation services — integral part of the scientific storage of agricultural produce such as wheat and rice — should be exempted from the levy of good and services tax (GST).
The GST Council has recently announced the withdrawal of the exemption on fumigation of agri produce in warehouses from July 18.
Ramesh Doraiswami, MD & CEO, NBHC, said the fumigation services being a key scientific component of the storage of agri produce has been singled out for levy of GST, which will result in ‘cost burden on the agri value chain’. It can also lead to a reduction in farmer realisation or an increase in consumer price, he said in a statement.
Fumigation, a curative treatment and the only practical way to kill internal insects or insects dwelling deep within the grain mass, is a regulatory requirement in most of the importing countries. The increase in demand for improved food safety standards throughout the world has imposed the requirement for good and quality food products. “Fumigation plays a more important role in controlling and in the management of infestation in commodities stored in tropical countries like India, where climatic conditions are favourable for infestation of stored grain pests. This process of fumigation is a mandatory quarantine requirement,” Doraiswami said.
In India, about 10 per cent of the total post-harvest losses happens due to unscientific storage. The annual storage losses have been estimated to be 14 million tonnes, which is amounting to approximately ₹7,000 crore, of which the stored grain insect pests alone account for ₹1,300 crore, the NBHC CEO said.
“Since fumigation and prophylactic treatment are an integral part of scientific storage, these services need to be carried out with precision, as even partial damage to quality due to insects can result in a complete loss of commercial value of food grains. Additionally, there is a possibility that this additional levy could result in fumigation services being carried out in an unorganized manner by untrained operators, thereby resulting in safety hazards to the operator and also harming public safety,” he said
Furthermore, given the low cost of fumigation, there is a relatively insignificant revenue implication of GST levy to the exchequer compared to the downside on grain quality and farm incomes. “Hence, considering the given challenges, we strongly appeal to the Ministry of Agriculture, Warehouse Department Regulatory Authority, the GST Council, and the Central Board of Indirect Taxes to re-consider the decision by rolling back the proposed withdrawal of exemption of GST on fumigation services of agri produce in warehouses,” Doraiswami added.