Lowered GST Rates for Biologicals, Higher Tariffs on Agrochemicals: Where Does this Leave India?

Pradip Dave: (PMFAI) and AIMCO Pesticides Ltd

AgriBusiness Global talked with Pradip Dave, President of the Pesticides Manufacturers & Formulators Association of India (PMFAI) and Chairman, AIMCO Pesticides Ltd., about tariffs and taxes affecting India’s crop protection market.

These are topics that will be explored at the International Crop Science Conference & Exhibition (ICSCE) on 19-20 January 2026 at the Le Meridien Hotel & Conference Center, Dubai Airport Road in Dubai, with an expected 1,000 attendees and more than 100 agrochemical, biologicals, and allied industry exhibitors.

Dave talked about the future of India’s crop protection and biologicals markets after the U.S. Trump Administrations’ 50% tariffs.

ABG: What current issues are happening in India that are affecting the crop protection industry?

Pradip Dave (PD): A major issue impacting the Indian agrochemical industry is the 50% tariff imposed by U.S. President Donald Trump, which will have significant impact on Indian agrochemical exports. The U.S. is one of the largest agrochemical export destinations for Indian agrochemical companies. During last four years, the U.S. has ranked either as the first or second largest export destination for India, out of more than 140 countries that Indian companies export agrochemicals.

Another current issue is the flood situation. This year, floods affected many parts of India during July through September, particularly in the northern region, and adversely impacted the domestic consumption of crop protection products. Massive crop damages have been reported from northern states, particularly from states like Punjab, Haryana, and Himachal Pradesh, etc. Many parts of the states like Uttar Pradesh and Bihar were also impacted by floods.

Surging imports of pesticides is another issue of great concern to the Indian agrochemical manufacturing sector, which saw a more than 50% increase in imports in last six years from INR 9,096 crores in FY 2019-20 to INR 13,998 crores in FY 2024-25 particularly from cheaper sources.

Currently, most of pesticide products (>90%) imported are generic and are manufactured locally.  Industry estimates suggest that India’s agrochemical manufacturing sector is about 30% unutilized production capacity, a direct consequence of cheaper imports.

Traders are importing sizeable quantity of molecules, especially technical grade pesticides, not for their captive consumption but for resale, which discouraged indigenous production. PMFAI has appealed to the Indian government to restrict import registrations, particularly to traders and also to adopt policy steps to marginalize these imports.

ABG: What geopolitical events are affecting Indian manufacturers? How will these Indian companies deal with it?

PD: The evolving U.S. tariff regime introduced significant shifts in global trade dynamics with direct implications for India’s exports. The implementation of the 50% tariff by the U.S. – initially 25% reciprocal tariffs, later doubled with additional 25% penalty linked to India’s imports of Russian oil, estimated to be impacting 55% – 65% of India’s exports to U.S., including the agrochemical sector.

The tariff particularly threatens labor intensive industries including the chemical sector.  The large-scale companies with diversified portfolios, diversified supply chains, markets and financial resilience absorb the shocks and are able to deal with it. The Micro, Small, and Medium Enterprises (MSMEs) are most vulnerable, and those companies that operate on very thin margins. Many MSMEs, who are sole suppliers and heavily depend on few U.S. clients, risk losing U.S. buyers to other countries.

Accelerated Free Trade Agreements (FTAs) and domestic economic reform can help Indian industries to deal with the situation.

India is speeding up FTA negotiations with European Union, United Kingdom, Association of Southeast Asian Nations (ASEAN), and Gulf Cooperation Council (GCC) as diversification becomes more urgent.  However, even successful FTAs will require time to boost exports.

Recently, India has enacted bold domestic reforms by reductions in goods and services tax (GST) rates effective from 22 September 2025, to boost domestic consumption. Though there is no change in GST rate applicable on agrochemicals. A reduction of GST on biological products, micronutrients, and fertilizers will likely help to increase consumption of these agri-inputs.

Considering the ongoing trade talks and first part of India-U.S. trade agreement expected to be finalized by November 2025, the industry hopes for positive outcome.

ABG: With the U.S. tariffs on China, will this open up business opportunities for India in the U.S.? Why or why not?

PD: As far as agrochemical industry is concerned, post-August 2025, Chinese imports cumulatively attracts only 30% tariff in comparison to India’s 50%, which actually reverses India’s competitive advantage, that was existing earlier.

ABG: What kind of movement do you see as far as India crop protection companies offering biologicals? Plant health? Ag tech formulation and partnerships?

PD: Biological products are quickly gaining traction in Indian agriculture, both in manufacturing and application, which prompted many agrochemical firms to strategically integrate biological solutions into their product lines.

With recent reforms reducing GST rates on biologicals from 12% to 5%, the market of this segment is likely achieve higher growth.  •