Relief measures for agriculture continue

Fertiliser manufacturers biggest beneficiaries

Salman Siddiqui April 28, 2018
Fertiliser manufacturers biggest beneficiaries PHOTO: APP

KARACHI: Agriculture sector continued to win the government’s heart and mind in the budget as it received extended relief measures and subsidies on multiple counts to remain vibrant and be able to feed the nation.

“The government has increased agriculture credit limit to (a cumulative) Rs1,100 billion for the next fiscal year… from Rs1,001 billion last year. Additionally, interest rate on agriculture credit has also been reduced significantly,” said Finance Minister Miftah Ismail while announcing the budget in the National Assembly.

At the end of February 2018, disbursement stood at Rs570 billion, and it is expected to increase to Rs800 billion by June 2018 against the set target of Rs1,001 billion, he said. Considering fertiliser as the critical farm input, the federal government reduced sales tax on all kinds of fertilisers.

“I am happy to announce that from July, 2018 there will be a reduced uniform GST rate of 2% on all fertilisers. This will eliminate distortions in the tax regime, further reduce fertiliser prices and promote use of balanced nutrients,” he said.

The rate of sales tax on supply of natural gas to fertiliser manufacturing plants for use as ‘feed stock,’ presently chargeable at the rate of 10%, may be reduced to 5% to cater for cash flow issues of manufacturers. Likewise, the rate of sales tax on Liquefied Natural Gas (LNG) to be imported by fertiliser manufacturers for use as feed stock is also proposed to be reduced from 5% to 0%, he said.

He also proposed to reduce GST on agriculture machinery from the current 7% to 5%.

Availability of water is necessary for crop production. The government presently provides electricity for agriculture tube well at reduced rates.

During 2018-19, the scheme will continue in these areas where the provincial governments agree to share cost of subsidy on a 50:50 basis.

The government is also proposing setting up an Agriculture Research Support Fund with an initial allocation of Rs5 billion. “The fund will provide financial grants for research and development of modern plant and seed varieties for achieving higher crop yields. The fund will be jointly managed by Finance Division and Ministry of National Food Security and Research,” he said.

The government is also proposing to establish a separate fund for indigenisation of agriculture technology with an initial allocation of Rs5 billion.


The livestock sector continues to be the largest sub-sector of agriculture in Pakistan. To sustain the growth in the sub-sector and provide further relief, it is proposed that “customs duty of 3% on import of bulls meant for breeding purposes be withdrawn,” Ismail said.

Presently, available concessionary rate of customs duty on the import of feeds meant for livestock sector may be further reduced from 10% to 5% and fans meant for use in dairy farms be allowed at a concessionary rate of 3% to members of the Corporate Dairy Association. 

Published in The Express Tribune, April 28th, 2018.

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