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For Union Budget 2020-21, Federation of Seed Industry of India (FSII) has urged the government for restoring the 200 percent income tax deduction, under section 35 (2AB) of the Income Tax Act, 1961, for the in-house Research and Development (R&D) expenditure in seed industry. The income tax deduction for the in-house R&D has been reducing over the last few years. Through an amendment as per Finance Act 2016, the weighted deduction was reduced to 150 percent effective from April 1, 2017 through March 31, 2020. It indicated a further reduction to 100 percent from April 1, 2020.
The Act applies to the eligible companies engaged in the business of biotechnology or in any business of manufacture or production of any article or thing that incurs any expenditure on scientific research, excluding the cost of land, on in house research and development (R&D) facility as approved by the Department of Scientific and Industrial Research (DSIR).
Dr Shivendra Bajaj, Executive Director, FSII said, “As compared to developed economies, R&D investment in India is very low and stands at around 0.7 percent of GDP. It cannot be ignored that R&D is critical for new technology development, innovations and to achieve the goal of $5 trillion economy. The government will have to encourage higher R&D investment to address emerging challenges of climate change, stagnant yields, increase food production and nutrition needs of the country.”
Countries like Chile, Argentina and South Africa dominate the global seed trade as they have positioned themselves as suppliers of reliable quality of seeds. India too has a well-developed seed industry, varied agro-climatic conditions, seed production expertise and the necessary infrastructure which can make India a global seed export hub. Currently, the seed export from India is around Rs 1000 crore, while the global seed trade is about Rs 100,000 crore (US$ 14 billion). By 2028, India can aim for at least 10 percent share of this trade, which is approximately Rs 10,000 crore.
Further, to make India an export hub, FSII has recommended that a conducive policy support should be provided by the government. For instance, varieties such as custom production of both genetically modified (GM) and non-GM seeds and production of export-oriented seeds should be exempted from registration. However, registration should be mandatory for seed produced for both domestic and export markets. Export of seed produced from India should be freely allowed without any delays and there should be time bound approvals from National Biodiversity Authority (NBA) for export of these Indian varieties.
According to the recommendations made by the seed association, a national policy on seed exports should be developed for a smooth process between Central government, states, NBA, Genetic Engineering Appraisal Committee (GEAC) and ports. A special cell under the Ministry of Agriculture should be formed to deal with export promotion and facilitation such as efficient disposal of export permits and import permits. It is also crucial to create a Seed Export Promotion Council with representatives from government, states, industry, scientists and other stakeholders. Export zones with adequate infrastructure should be set up closer to dry ports, where export- oriented processing and packing facilities can be set up by the industry. A dry port facility for quick movement of seeds should be built closer to the production centre such as Bangalore, Coimbatore, Hyderabad, Aurangabad, Ahmedabad.