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The Indian Micro-Fertilizers Manufacturers Association has urged the government to extend a uniform 5 per cent GST across all fertilisers notified under the Fertiliser Control Order and speed up refunds of excess input tax credits. While welcoming proposed GST reforms, the association said higher GST on raw materials continues to lock up working capital due to an inverted duty structure. It also called for a clear, time-bound refund mechanism to ease financial pressure on manufacturers. In addition, the body has sought a One Nation, One Licence system to replace state-wise approvals, reduce compliance costs, and improve ease of doing business. The proposed measures aim to strengthen the fertiliser sector, support manufacturers, and ensure timely availability of products for farmers.
The Indian Micro-Fertilizers Manufacturers Association has urged the central government to extend a uniform 5 per cent goods and services tax (GST) across all fertilisers notified under the Fertiliser Control Order (FCO), expedite refunds of excess GST credits, and introduce a unified licensing system ahead of the Union Budget. Advertisement
The industry body acknowledged the proposed GST 2.0 framework as a significant reform for the fertiliser sector, particularly the reduction in GST from 12 per cent to 5 per cent on Schedule 1G items and their mixtures. However, it said manufacturers continue to face challenges due to an inverted duty structure, where input raw materials and services attract higher GST rates than finished fertiliser products.
According to the association, this mismatch leads to the accumulation of excess input tax credits, resulting in working capital being locked up. Rahul Mirchandani, President of the association and Chairman of Aries Agro Limited, said the issue affects manufacturers operating in a price-sensitive and regulated environment.
The association has called for a clear and time-bound mechanism for the refund of excess GST credits. It said faster refunds would ease working capital pressure and allow companies to invest more in product quality, capacity expansion, and farmer outreach.
To address inconsistencies in the tax framework, the industry body has also sought parity across the fertiliser ecosystem by extending the 5 per cent GST rate to all fertilisers notified under the FCO. According to the association, a common tax rate would reduce classification disputes, ensure a level playing field, and support innovation without tax-related distortions.
In addition, the association has proposed the implementation of a One Nation, One Licence system to simplify regulatory processes. It has suggested the creation of a centralised digital repository for licence-related documents, accessible to all state governments, to enable faster verification and approval of marketing permissions.
At present, fertiliser manufacturers are required to obtain separate licences at the state or, in some cases, district level. The association said this results in duplication of processes, delays, and higher compliance costs. A unified licensing framework, it said, would improve ease of doing business for manufacturers and support timely availability of fertiliser products for farmers.
The association said the proposed measures would help streamline operations across the fertiliser value chain, improve cash flow management, and strengthen the sector's ability to meet agricultural demand.
Source: PTI
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