Agriculture Sector Seeks Tax Relief, Biofuel And Infra Push Ahead Of Budget

Country's agriculture and allied industry representatives are calling for tax cuts, increased funding for biofuels and stronger support for farmers ahead of the FY27 Budget, as the sector faces mounting climate pressures and aims to boost rural incomes.

The demands come at a critical juncture as India approaches the midpoint of its agriculture targets for 2030 and lays the groundwork for its Viksit Bharat 2047 vision. Stakeholders have emphasised the need for sustained investment in innovation, infrastructure and market reforms to position Indian agriculture as a globally competitive growth engine.

In a representation made to Finance Minister Nirmala Sitharaman, the All India Sugar Trade Association (AISTA) has demanded Rs 2,500 crore for advanced biofuels, including sustainable aviation fuel (SAF) and green hydrogen, alongside 25 billion rupees to help financially weak sugar mills build integrated bio-energy hubs.

India already imports vegetable oil, and ethanol can play an important role in alcohol-to-jet technology for SAF, the trade body said. Producing one kilogram of hydrogen consumes 70 units of electricity, and infrastructure using ethanol for hydrogen production would benefit the sugar industry, it added.

Many sugar mills in the country, especially cooperative mills in Maharashtra, Uttar Pradesh and Punjab, lack distilleries and depend on sugar and molasses sales to meet financial commitments including cane price payments to farmers, wages and salaries.

"The financial help is necessary for them to install distillation capacities to produce ethanol, which is a value addition. It will definitely increase their capacities to pay remunerative cane prices to cane farmers," AISTA said.

The association also demanded a reduction in goods and services tax (GST) on flex fuel and strong hybrid vehicles to 5 per cent from the current 18-40 per cent, aligning with electric vehicles, and sought a Rs 6-8 per litre increase in ethanol procurement prices.

AISTA also called for an increase in the minimum selling price of sugar from the current Rs 31 per kg, unchanged since 2019, and linking the fair and remunerative price of cane to the minimum support price annually.

Rajib Chakraborty, national president of the Soluble Fertiliser Industry Association, said the upcoming budget is expected to advance a "3D Reform" of the Fertiliser Control Order - digitisation, decriminalisation and deregulation.

Key expectations include promoting residue-free, nutrient-rich farming as an integrated national agriculture and health policy, and recognising non-subsidised soluble, organic, micro nutrient and stimulant fertilisers as strategic materials alongside subsidy reduction, he said in a statement.

Nishant Kanodia, chairman of Matix Fertilisers & Chemicals, said continued policy support for timely capacity addition and investment-friendly frameworks will help deepen self-reliance and reduce external vulnerabilities.

Rana George, managing director of Kelachandra Coffee, said India's coffee sector faces rising climate uncertainty, higher cultivation costs and labour constraints despite strong global demand.

Budget 2026 should strengthen farm resilience through irrigation, crop insurance, long-tenure credit for replanting and support for mechanisation, while investing in research for climate-tolerant varieties and a national digital traceability system, George said.

Simon Wiebusch, country divisional head of Bayer's Crop Science Division in India, Bangladesh and Sri Lanka, said the sector needs stronger income and credit support for farmers, predictable trade policies, and sustained investment in agri-logistics and post-harvest infrastructure.

Arun Raste, managing director and CEO of NCDEX, said rationalising or removing the Commodity Transaction Tax and providing GST clarity for commodity derivatives will improve hedging viability for farmers.

Preet Sandhu, founder and managing director of AVPL International, called for strengthening "Drone Shakti" through incentive-based manufacturing to signal India's shift from pilot adoption to large-scale expansion of the drone economy.