As part of the Azadi Ka Amrit Mahotsav celebrations, the Government of India has delivered yet another significant reform aimed at empowering the agricultural sector—this time through bold GST rationalization. Under the leadership of Prime Minister Shri Narendra Modi and the stewardship of Finance Minister Smt. Nirmala Sitharaman, the new Goods and Services Tax (GST) rates are being hailed as a turning point for Indian agriculture. Union Agriculture Minister Shri Shivraj Singh Chouhan called the move “revolutionary” and predicted that “new chapters of growth will be written in agriculture.”
The revised GST structure directly impacts core sectors like farm mechanisation, dairy, aquaculture, agroforestry, and food processing, while also addressing sustainability and affordability for small and marginal farmers. These reforms will not only reduce input costs but also enhance profitability for millions of farmers across the country.
Lower Input Costs, Higher Profit Margins
Farmers have long faced high costs for machinery, fertilisers, and irrigation equipment. The recent GST rate cuts are a welcome relief. Tractors under 1800 cc now attract just 5% GST—down from the earlier 12%. This change alone brings significant savings. For instance, the price of a 50 HP tractor has come down by ₹53,000 due to lower tax rates. Similarly, GST on parts like tyres, pumps, and even power tillers has dropped from 18% to 5%, making mechanised farming more accessible.
Solar-powered irrigation devices and fixed-speed diesel engines now also attract only 5% GST, significantly lowering the cost of powering farms sustainably. These rate cuts will help small and medium farmers invest in modern tools that increase productivity and reduce manual labour.
Boost for Sustainable and Organic Farming
In a move that aligns with India’s growing push toward organic and sustainable agriculture, GST on bio-pesticides and several micronutrients has been slashed from 12% to 5%. This shift encourages farmers to reduce their reliance on chemical inputs, promoting soil health and long-term productivity. The reform is expected to benefit organic farmers and FPOs (Farmer Producer Organisations), particularly under schemes like the National Mission on Natural Farming.
Empowering Dairy, Aquaculture, and Allied Sectors
A major highlight of the reform is the removal of GST on milk and cheese, benefitting both consumers and dairy producers. GST on ghee, butter, and milk cans has also been reduced, making the dairy sector more competitive and accessible. Similar reductions in GST on ‘prepared/preserved fish’ (from 12% to 5%) and natural honey are expected to boost aquaculture, beekeeping, and the income of rural and tribal communities.
In regions like Odisha, Madhya Pradesh, and Chhattisgarh, GST on tendu leaves has been reduced from 18% to 5%, providing crucial support to tribal livelihoods that depend on forest produce.
Strengthening India’s Agri-Economy
These GST cuts are more than just tax adjustments—they are catalysts for long-term growth. By reducing costs across inputs, processing, storage, and distribution, India’s agricultural supply chain is set to become more efficient and competitive. With lower costs, farmers and cooperatives will find themselves in a stronger position to compete against imported goods, furthering the goal of Atmanirbhar Bharat (self-reliant India).
In summary, the new GST rates represent a landmark reform—farmer-centric, forward-looking, and foundational to a prosperous rural economy.