Shivraj Singh Chouhan Hails GST Rate Cuts on Agricultural Equipment: A Boost for India’s Rural Sector

September 7, 2025

New Delhi: Union Agriculture Minister Shivraj Singh Chouhan has warmly welcomed the recent Goods and Services Tax (GST) rate cuts on agricultural equipment, describing them as a transformative step for India’s rural economy.

The GST Council, in its 56th meeting chaired by Finance Minister Nirmala Sitharaman, announced a significant reduction in tax rates on farm machinery, tractors, and other agricultural inputs, slashing rates from 12% or 18% to a uniform 5%, effective from September 22, 2025.

A Move to Empower Farmers: Chouhan

Speaking at a press conference, Chouhan highlighted the far-reaching impact of these reforms, stating, “This is a historic move to empower our farmers and strengthen the backbone of India’s economy—the rural sector. By reducing GST on essential agricultural equipment, we are lowering cultivation costs and promoting mechanization, which will enhance productivity and improve livelihoods for millions of farmers.”

The rate cuts cover a wide range of agricultural machinery, including tractors below 1,800 cc, tractor components like tyres and hydraulic pumps, drip irrigation systems, sprinklers, and harvesting equipment.

Additionally, key fertilizer inputs such as sulphuric acid, nitric acid, and ammonia, as well as bio-pesticides, have also seen their GST rates reduced from 18% to 5%. These changes are expected to result in a 6-7% reduction in equipment prices, providing significant savings for farmers, particularly small and marginal ones engaged in mixed farming and animal husbandry.

A vision of making Aatmanirbhar Bharat

Chouhan emphasized that the reforms align with the government’s vision of Aatmanirbhar Bharat (Self-Reliant India) by making modern farming tools more affordable and accessible. “Tractors and machinery are no longer luxuries; they are necessities for modern agriculture. This GST reduction will encourage farmers to adopt advanced technology, boosting efficiency and ensuring food security,” he said.

The minister also noted that the reduction in GST on commercial cargo vehicles (from 28% to 18%) and third-party insurance for goods carriers (from 12% to 5%) will lower logistics costs, making it easier for farmers to transport produce to markets.

The Ministry of Cooperation echoed Chouhan’s sentiments, stating that the GST cuts will benefit over 10 crore farmers, particularly in the dairy and cooperative sectors.

Exemptions on milk and paneer, combined with reduced rates on dairy processing equipment, are expected to improve margins for dairy farmers and strengthen rural entrepreneurship. Major dairy brands, including Amul, have welcomed the move, anticipating increased demand and better income stability for farmers.